2024 (1) TMI 981 - AT - Central Excise

Eligibility for Abatement of duty - Notified Goods - Compounded levy scheme - Rule 10 of Pan Masala Packing Machines (Capacity Determination and Collection of Duty) Rules, 2008 - HELD THAT - From Rule 10, it is clear that abatement is available to appellant on following condition laid therein. As per conditions appellant has to intimate jurisdictional officer in advance regarding sealing and de-sealing of machines. In the present case, there is no dispute that intimation was given well in advance and Jurisdiction Range Superintendent has de-sealed and re-sealed machine, which was operated only during the period 01-11-2012 to 15-11-2012. From the Rule 10 IBID, we do not find any provision for payment of duty for the whole month and then claim refund on account of abatement of duty. There is no dispute even by department that appellant is not liable to pay duty during period, when machine is not operated. The revenue has demanded duty for days for which the machine was not in operation - In the present case, appellant is eligible for abatement and under no circumstances duty can be demanded for the period of abatement from 16-11-2012 to 30-11-2012, when PPM Machine was not in operation and not produced any Notified Goods. This issue has been considered in various judgments - In the case of THE COMMISSIONER VERSUS M/S THAKKAR TOBACCO PRODUCTS P. LTD. 2015 (11) TMI 319 - GUJARAT HIGH COURT , it was held that Assessee having complied with requirement, entitled to benefit claimed - The Assessee is entitled to abatement of duty, in event of closure of factory for continuous period of 15 days or more, without first depositing duty in terms of Rule 10 ibid. Question of law stand answered in favour of assessee in terms of Rule 10 of Pan Masala Packing Machines (Capacity Determination and Collection of Duty), Rules, 2008. Penalty u/r 27 of CER - HELD THAT - Appellant had cleared Notified Goods produced earlier vide Invoice Nos 3571 to 3608, which is a case for imposing penalty under Rule 27 of Central Excise Rules 2002 on Appellant. Such penalty u/r 27 ibid is imposed on Appellant by Adjudicating authority, which is sufficient in the interest of justice in the facts of this case. Hence, the penalty imposed under the Rule 27 of Central Excise Rules, 2002 in O-I-O by original adjudicating authority in this case is upheld. The Abatement in terms of Rule 10 of Pan Masala Packing Machines (Capacity Determination and Collection of Duty), Rules, 2008 for non-production of notified goods is allowed for November 2012, consequently the duty demand with interest is set aside. However, the penalty imposed under the Rule 27 of Central Excise Rules 2002 is upheld - Appeal allowed in part.

Summary

Issues involved: Eligibility for "Abetment" under Rule 10 of Pan Masala Packing Machines (Capacity Determination and Collection of Duty) Rules, 2008.

The judgment addresses the issue of whether the Appellant is eligible for "Abetment" under Rule 10 of the Pan Masala Packing Machines (Capacity Determination and Collection of Duty) Rules, 2008. The Appellant, a manufacturer of "Notified Goods" (Pan Masala containing Tobacco), operated a Pouch Packing Machine (PPM) under Compounded Levy. The dispute arose when the Appellant did not produce any Notified Goods during a specific period, leading to a demand for additional duty by the Revenue. The Appellant argued that as per Rule 10, abatement of duty is applicable when Notified Goods are not produced for a continuous period of 15 days or more, which they claim to have fulfilled. The Appellant cited various legal precedents to support their case, emphasizing the non-production of Notified Goods during the relevant period. The Revenue, on the other hand, supported the findings of the lower authorities and opposed the Appeal.

The Tribunal examined the submissions from both sides and analyzed the relevant provisions of Rule 10 of the Pan Masala Packing Machines Rules. It was noted that the Appellant had followed the necessary procedures for sealing and de-sealing the machine as required by the rule. The Tribunal concluded that the Appellant was eligible for abatement of duty for the period in question as they had not produced any Notified Goods during that time. The judgment highlighted that the mandatory condition for abatement is the non-production of Notified Goods for over 15 days in a month, which the Appellant had satisfied. The Tribunal also upheld the penalty imposed on the Appellant for the lapse in removing goods during the closure of the PPM, as per Rule 27 of the Central Excise Rules 2002.

In conclusion, the Tribunal allowed the Abatement under Rule 10 for non-production of Notified Goods in November 2012, setting aside the duty demand with interest. However, the penalty imposed under Rule 27 of the Central Excise Rules 2002 was upheld. The impugned orders were modified accordingly, and the Appeal was partly allowed with consequential relief as per the law.