2023 (6) TMI 235 - AT - Central Excise

Demand of differential duty in terms of 7th Proviso to Rule 9 of the Pan Masala Packing Machines (Capacity Determination and Collection of Duty) Rules, 2008 - compounded levy - differential duty has to be paid only during the period of default on the highest number of machines installed/operated based on the amended provisions or as contended by the Revenue to be calculated in terms of proviso 7 of Rule 9 of PPM (CDCD) Rules, 2008 for the entire financial year as it stood prior to 27.2.2010? HELD THAT - The learned Commissioner vide para 24.4 of the impugned order has categorically referred to Board Clarifications, and has calculated differential duty at para 26 taking into consideration the PPM (CDCD) Rules, 2008 as amended and the Board s clarification given vide letter F.No.341/109/2008-TRU dated 27.7.2009 and Letter No.81/17/2007-CX3 dated 20.04.2010. Board s clarifications are very categorical and clear wherein it is stated that Reading of proviso to Rule 7 to the Rule 9 of PPM (CDCD) Rules, 2008 makes it clear that the default for payment of duty for one month would not be treated as default for all the remaining part of the full financial year. However, the default would continue till the duty for the said month is paid . Hence, in the instant case, the learned Commissioner has rightly demanded the differential duty along with interest for the available packing machines during the period of default. In the case of S.M. Perfumes vs. CCE, the Hon ble High Court of Karnataka at Bangalore PRINCIPAL COMMISSIONER OF CENTRAL EXCISE VERSUS M/S. S.M. PERFUMERS PVT. LTD., 2017 (2) TMI 666 - KARNATAKA HIGH COURT has considered these Rules and relevant provisos and has rejected the Revenue s plea that the 7th Proviso would operate independently for the whole year. In view of the above observations and clarifications issued by the Board, there is found no substance in the Revenue s appeal and there is absolutely no ground to set aside the Commissioner s order - the Commissioner s order, wherein he has redetermined the differential duty taking into account the specific clarifications given by the Board is upheld - appeal of Revenue dismissed.

Summary

Issues involved:
The appeal involves the interpretation of the 7th Proviso to Rule 9 of the Pan Masala Packing Machines (Capacity Determination and Collection of Duty) Rules, 2008, regarding the payment of differential duty by a manufacturer for the remaining months of the financial year based on the number of operating packing machines declared or found available in the premises.

Summary:

Issue 1: Calculation of differential duty based on the number of operating packing machines

The Revenue filed an appeal against the Order-in-Original passed by the Commissioner of Central Excise, Bangalore, dropping the proposal for demanding differential duty from the respondent. The Revenue argued that the duty should have been paid based on the highest number of packing machines found available in the premises after the default period. The Commissioner, however, calculated the differential duty by considering the number of machines declared in the month for which duty was last paid or the total number of packing machines found available at any time thereafter, whichever is higher.

Decision: The Tribunal upheld the Commissioner's order, stating that the differential duty should be paid for the available packing machines during the period of default, as per the provisions of Rule 9 of the Pan Masala Packing Machines Rules, 2008.

Issue 2: Interpretation of Board's clarifications and relevant case laws

The Revenue contended that the Commissioner wrongly interpreted the proviso and demanded differential duty only for the months of default instead of demanding duty for the entire financial year based on the highest number of machines operated. The Respondent, supported by relevant case laws, argued that the Commissioner correctly calculated the redetermined duty as per the rules and clarifications.

Decision: The Tribunal referred to Board clarifications and relevant case laws to support the Commissioner's decision in demanding the differential duty for the remaining months of the financial year based on the available packing machines during the default period.

Conclusion:

The Tribunal, considering the Board's clarifications and case laws, upheld the Commissioner's order, determining the differential duty based on the number of operating packing machines as per the provisions of the Pan Masala Packing Machines Rules, 2008. The Revenue's appeal was dismissed, affirming the redetermined duty calculated by the Commissioner.