2024 (7) TMI 182 - AT - Central Excise

Clandestine operation of Form, Fill Seal (FFS) for packing machine in contravention of the provisions of the Chewing Tobacco and Manufactured Tobacco Packing Machines Rules, 2010 in an unregistered premise, without obtaining registration - failure to prove the date of installation of machine - demand of duty alongwith penalties on both the appellants. Whether the date of installation of the machine is on the basis of evidence placed or it is to be presumed that the same has to be taken up from the 1st April, 2012 in the absence of any material evidence? HELD THAT - The fact of sale of machine by M/s Hindustan Machines has been verified. During investigation, it was found that M/s Hindustan Machines have sold the machine on 16.03.2012. The Revenue has alleged that this is a afterthought. It is found that the investigation was done on 29.03.2012 and the invoices has been produced on 02.04.2012, which is within 2 or 3 days, but no evidence has been produced by the Revenue that the said invoice is not genuine as on the said invoices, the supplier of the machine has paid the VAT. In that circumstances, the premise goes benefit of doubt in favour of the appellant that they had been able to produce the invoices of the machine on 16.03.2012, which might have been installed within a week time and the claim of the appellant is that they have started production on 22.03.2012. In this case, the appellant has been able to prove with a documentary evidence and the packing machine has been supplied on 16.03.2012 from Bhillai. As the appellant is located in Kalahandi, therefore, production of machine starts w.e.f. 22.03.2012. The appellant is liable to duty in terms of Rule 18 (2) of the Chewing Tobacco and Unmanufactured Tobacco, Packing Machine (Capacity Determination and Calculation of Duty) Rules, 2010 w.e.f. 22.03.2012 along with interest and the appellant is liable to be penalized in their activity as they failed to intimate the Department in advance - The remaining demand is not sustainable against the appellant. Appeal disposed off.

Summary

Issues:
Appeal against confirmed duty demand and penalties for clandestine operation of packing machine without registration and duty payment.

Analysis:
1. Clandestine Operation: The appellants were found engaged in clandestine operation of a packing machine for branded chewing tobacco without registration and duty payment. The machine was found in an unregistered premise, leading to the demand of duty and penalties.

2. Investigation and Seizure: The intelligence gathered led to a search where the packing machine was found in operation. Statements of individuals present were recorded, revealing ownership details and purchase information of the machine. The machine, vehicle, and goods were seized based on non-compliance with registration and duty payment requirements.

3. Demand of Duty: A show-cause notice was issued demanding Central Excise duty and penalties under specific rules. The appellants contested the notice, claiming the machine was purchased later, and production started after a specific date, challenging the demand prior to that date.

4. Legal Arguments: The appellant argued that duty demand before a certain date was not sustainable based on the machine purchase and production commencement dates. They cited legal precedents to support their contentions, emphasizing the need for evidence and timing in duty calculations.

5. Revenue's Position: The Revenue contended that invoices produced by the appellant were fabricated, supporting the confirmed demand. The authenticity of the documents was questioned, leading to a dispute regarding the justification for the duty demand.

6. Judgment: The tribunal analyzed the evidence, particularly the invoices, to determine the installation and production commencement dates of the machine. Benefit of doubt was given to the appellant due to lack of evidence disproving the authenticity of the invoices. Duty liability was established from the verified purchase date onwards, with penalties imposed for non-compliance.

7. Legal Precedents: The tribunal referenced a High Court decision to support the finding that duty liability starts from the installation date of the machine. The documentary evidence presented by the appellant regarding the machine purchase and installation date was crucial in determining the duty liability period.

8. Final Orders: The tribunal ruled in favor of the appellant regarding the duty liability period, ordering payment from the installation date onwards. Penalties were imposed for failure to inform the department in advance, while the remaining demand was deemed unsustainable. The appeals were disposed of accordingly, with the judgment pronounced on a specific date.