2018 (10) TMI 618 - AT - Central Excise

Penalty - Valuation - manufacturing of Pan Masala containing Tobacco (Gutkha) - sealing of machinery - Held that - All the machines were sealed and as such could not have been operated during the period of closure and as observed by Commissioner (Appeals) that even if the Department feels that sealing has not been done as per requirement of law then it was the fault of the Department for which the assessee cannot be penalized as he had filed timely intimation - penalty not warranted - appeal dismissed - decided against Revenue.

Summary

Issues:
Revenue's appeal rejected by Commissioner (Appeals) against Assistant Commissioner's order. Abatement of duty sought by respondent for factory closure. Interpretation of Rule 6 and Rule 10 of Pan Masala Packing Machine Rules. Tribunal's decision in Kay Pan Suganth Pvt. Ltd. case referenced.

Analysis:
The case involved an appeal by the Revenue against the rejection of their appeal by the Commissioner (Appeals) regarding the abatement of duty sought by the respondent due to the closure of their factory. The respondent, a manufacturer of Pan Masala, had sealed all their packing machines during a factory closure period. The abatement was claimed for the duration of the factory closure, as per Rule 10 of the Pan Masala Packing Machine Rules. The Deputy Commissioner had granted the abatement, which was challenged by the Revenue.

The Commissioner (Appeals) upheld the abatement, stating that the respondent had fulfilled all conditions of Rule 10 for the abatement of proportionate duty. It was noted that the provisions of Rule 6 were for determining duty liability based on the number of operating machines, while Rule 10 applied for abatement during factory closures. The Commissioner emphasized that Rule 10 did not require the uninstallation of machines, only sealing to prevent operation during the closure period.

The Appellate Tribunal, in agreement with the Commissioner (Appeals), rejected the Revenue's appeal. They cited the Tribunal decision in the case of Kay Pan Suganth Pvt. Ltd., which highlighted that sealing of machines was the responsibility of the Revenue, not the assessee. As all machines were sealed during the factory closure, the Tribunal found no grounds to interfere with the Commissioner's decision. The Tribunal emphasized that the onus was on the Revenue to ensure proper sealing, and any lapses in this regard could not penalize the assessee who had followed due process.

In conclusion, the Tribunal upheld the Commissioner (Appeals) decision, rejecting the Revenue's appeal. The judgment highlighted the importance of following the specific provisions of Rule 10 for abatement during factory closures and underscored the responsibility of the Revenue in ensuring compliance with sealing requirements.