2018 (4) TMI 764 - AT - Central Excise

Abatement - Rule 10 of CER - manufacture of Pan Masala containing tobacco - Gutka - sealing of machinery - during the period of dispute, certain number of machines had been got sealed, and these machines had not been operated for the whole month but had been operated only for part of the month - whether in respect of such machines the duty would be payable only on pro-rata basis for the number of days in the month during which the machine had functioned or would be payable for the whole month without giving abatement for the period for which the machine was sealed? Held that - it is clear that the entire factory was not closed. A few machines were working and production was on. It is not the case of the assessee-Appellants that entire factory was closed for a continuous period of 15 days or more during which there was absolutely no manufacturing activity and no removal of the finished goods. Therefore, abatement under Rule 10 is not available. Abatement under Rule 10 cannot be given in respect of individual machines which may have been sealed for a continuous period of 15 days or more, when during that period, other machines were functioning and factory was in operation. Other than Rule 10, there is no provision for charging duty on pro-rata basis in respect of machines which, for the reason of being sealed, were operating only during part of the month. Appeal dismissed - decided against assessee-appellant.

Summary

Issues involved:
Appeal against Order-in-Original on Central Excise Duty liability calculation based on operating packing machines and abatement for non-operational machines.

Detailed Analysis:

1. Background of the Case:
The appeal was filed against the Order-in-Original No. 07/D-I/2011 dated 31.10.2011 by the assessee-Appellants, who were engaged in the manufacture of 'Gutka' subject to Central Excise Duty under the Central Excise Tariff Act, 1985.

2. Duty Calculation Dispute:
The dispute revolved around the Central Excise Duty payment method. The assessee-Appellants paid duty on a pro-rata basis for operational machines only. However, the Department demanded duty for the whole month, including penalty, for all installed machines, regardless of operational status.

3. Legal Framework and Arguments:
The legal framework under the Pan Masala Packing Machines Rules, 2008 was crucial. The assessee-Appellants argued for duty calculation based on operational machines only, citing specific rules like Rule 8 and 10 which provided for alterations in the number of operating machines and abatement in case of non-production of goods.

4. Department's Position:
The Department defended the impugned order justifying the duty demand for all installed machines, irrespective of operational status.

5. Judicial Analysis:
The Tribunal analyzed the rules governing duty calculation and abatement. It highlighted the requirement for a factory-wide closure for abatement under Rule 10, which was not met in this case. Therefore, abatement could not be granted for individual sealed machines.

6. Decision and Rationale:
The Tribunal upheld the impugned order, stating that abatement under Rule 10 was not applicable as the entire factory was not closed for 15 days or more. It emphasized that duty calculation on a pro-rata basis for sealed machines had no specific provision other than Rule 10.

7. Final Verdict:
Consequently, the appeal by the assessee-Appellants was dismissed, and the impugned order was sustained, as per the reasons provided in the judgment.

This detailed analysis of the judgment showcases the legal intricacies involved in the dispute over Central Excise Duty calculation and abatement, providing a comprehensive understanding of the case and its outcome.