2021 (6) TMI 618 - AT - Central Excise

Demand for differential duty - assumptions and presumptions under the Chewing Unmanufactured Tobacco Packing Machine (Capacity Determination Collection of Duty) Rules, 2010, read with Section 3A of the Act - HELD THAT - Under the scheme of CT Rules, 2010 read with Section 3A of the Act, unless the declaration filed by a manufacturer is found to be untrue or false, no demand for additional duty can be raised. In Rule 18(2) of the CT Rules, 2010 - if it is found that goods have been manufactured or cleared from a unit which is not registered or the number of machine or the RSP of the pouches is contrary to the declaration, than the assessee can subject to demand of the duty and levy of penalty. Admittedly, in the facts of the present case, the Department have not found any case of mis-declaration or any other misgiving on the part of the appellant. The whole case of Revenue is made out on the basis of assumptions and presumptions, based on the subsequent machine installed in the month of May, 2010, which is not permissible under the scheme of CT Rules, 2010. Further it is found that the order determining duty liability dated 26.04.2010 has not been appealed, and as such the same is binding on the Department. Appeal allowed - decided in favor of appellant.

Summary

Issues:
- Whether demand for differential duty can be raised on assumptions and presumptions under the Chewing & Unmanufactured Tobacco Packing Machine (Capacity Determination & Collection of Duty) Rules, 2010, read with Section 3A of the Act.

Analysis:

1. Facts and Background: The appellant, engaged in manufacturing chewing tobacco, installed a new packing machine in compliance with the CT Rules, 2010. Due to technical issues, the machine was replaced with another one from the same manufacturer. The Revenue alleged the new machine to be a "double track machine" based on certain characteristics.

2. Allegations and Proceedings: The Revenue issued a show cause notice demanding differential duty for treating the machine as a double track one, contrary to the appellant's declaration. The Additional Commissioner confirmed the demand and penalty, which was upheld by the Commissioner (Appeals). The appellant contested the demand based on the lack of mis-declaration and the finality of the duty determination order dated 26.04.2010.

3. Legal Arguments: The appellant argued against the demand, citing the absence of mis-declaration and the finality of the duty determination order. The appellant also presented a clarification from the machine manufacturer confirming the replacement machine's specifications.

4. Judgment: The Tribunal found that unless a manufacturer's declaration is proven false, no additional duty can be demanded under the CT Rules, 2010. As there was no evidence of mis-declaration by the appellant, the demand based on assumptions regarding the replacement machine was deemed impermissible. The Tribunal emphasized that the duty liability order dated 26.04.2010, which was unchallenged, should be binding on the Revenue. Consequently, the impugned order was set aside, and the appeal was allowed with consequential benefits.

In conclusion, the Tribunal ruled in favor of the appellant, highlighting the importance of factual evidence over assumptions in determining duty liabilities under the CT Rules, 2010. The judgment underscored the significance of accurate declarations by manufacturers and the limitations on Revenue's ability to raise demands based on presumptions without concrete evidence of mis-declaration.