2017 (5) TMI 1335 - AT - Central Excise

Valuation - Pan masala - abatement - whether under the Pan Masala Packaging Machines (capacity determination and collection of duty) Rules, 2008, the abatement is admissible suo motu or the duty has to be paid first and the abatement is to be allowed, thereafter? Held that - the issue herein is squarely covered by the precedent ruling of this Tribunal in the case of M/s Trimurti Fragrances Pvt. Ltd. 2015 (8) TMI 34 - CESTAT NEW DELHI , where it was held that payment of duty first for the whole month and then claiming of rebate is not a precondition and duty is payable for the number of days for which a factory was working. Thus, demand of duty for the whole month was held unsustainable. Appeal dismissed - decided in favor of respondent-assessee.

Summary

Issues:
1. Interpretation of abatement under Pan Masala Packaging Machines Rules, 2008.

Analysis:
The main issue in this case revolves around the interpretation of abatement under the Pan Masala Packaging Machines Rules, 2008. The appeal was filed by the Revenue against an Order-in-Appeal passed by the Commissioner of Central Excise & Customs, Ghaziabad. The central question was whether the abatement is admissible suo motu or if the duty must be paid first before allowing the abatement. The respondent had 44 machines, with 25 machines sealed and remaining machines being used for packing pouches. The respondent paid duty for running 25 machines in January 2009. The sealed machines were later desealed for manufacturing purposes. The respondent claimed abatement for the period the machines remained sealed. The adjudicating authority allowed abatement for a specific period but refused for the remaining days of February, imposing a penalty under Rule 17 of the Pan-masala Rules, 2008.

The respondent appealed the decision, and the Commissioner (Appeals) set aside the Order-in-Original, denying abatement for the two days of February and imposing a penalty. The Revenue challenged this decision before the Tribunal, arguing that the abatement can only be claimed after paying the duty as per Rule 10 of the Pan-masala Rules, 2008. The respondent cited a precedent case where the Tribunal held that payment of duty for the whole month before claiming rebate is not mandatory, and duty is payable only for the days the factory was operational.

After considering the arguments, the Tribunal found that the issue was already settled in a previous ruling of the Tribunal. The Tribunal referred to a specific provision in the Pan Masala Rules regarding duty liability recalculations based on the number of days of operation. The Tribunal concluded that the Revenue's demand for duty for the entire month was unsustainable. Therefore, the Tribunal dismissed the Revenue's case, allowing the respondent-assessee to avail consequential benefits as per the law.