2023 (6) TMI 492 - AT - Central Excise

Default in the payment of duty - whether 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 - Board s clarifications F.No.341/109/2008-TRU dated 27.7.2009 and No.81/17/2007-CX3 dated 20.04.2010 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. Board s clarifications are very categorical and clear wherein it is stated that 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. Revenue is bound to follow the Board s clarification as per the decision rendered by Hon ble Supreme Court in the case of COLLECTOR OF CENTRAL EXCISE, VADODARA VERSUS DHIREN CHEMICAL INDUSTRIES 2002 (2) TMI 115 - SC ORDER . In view of the Board s Clarifications vide F.No.341/109/2008-TRU dated 27.7.2009 and No.81/17/2007-CX3 dated 20.04.2010, the Commissioner s order wherein he has redetermined the differential duty taking into account the Boards clarifications dated 27.7.2009 and 20.4.2010, is upheld and the department s appeal is dismissed. Appeal dismissed.

Summary

Issues:
The issues involved in the judgment are the determination of the duty payable by a manufacturer of Pan Masala (Gutka) for contravention of provisions of the Pan Masala Packing Machine (Capacity Determination and Collection of Duty) Rules, 2008, and the interpretation of Proviso 7 of Rule 9 of the said Rules.

Issue 1: Contravention of Duty Payment Rules
The manufacturer, M/s. S.M. Perfumes, was found to have not paid the monthly duty for the month of July 2008 within the due date as required under Rule 9 of the Pan Masala Packing Machine Rules, 2008. Additionally, the manufacturer continued to operate packing machines for Gutka during the subsequent months, leading to the re-determination of duty for the remaining months of the financial year from August 2008 to March 2009. The learned Commissioner demanded the differential duty along with interest due to the default in payment.

Issue 2: Interpretation of Proviso 7 of Rule 9
The Revenue challenged the impugned order of the Commissioner, contending that the differential duty should have been demanded for the entire financial year 2008-2009 and 2009-2010 based on the highest number of machines operated, as per Proviso 7 of Rule 9 of the Pan Masala Packing Machine Rules, 2008. The Revenue argued that the Commissioner incorrectly calculated the duty only for the months of default, disregarding the Board's clarifications dated 27.7.2009 and 20.4.2010.

Decision:
The Tribunal considered the arguments of both parties and the relevant provisions of the law. The Commissioner's order was upheld based on the Board's clarifications and the decision of the Hon'ble High Court of Karnataka. The Tribunal affirmed that the duty and interest should be paid for the available packing machines during the period of default, in accordance with the Proviso 7 of Rule 9 of the Pan Masala Packing Machine Rules, 2008. The Tribunal dismissed the Revenue's appeal, citing the binding nature of the Board's clarifications and the precedent set by the High Court's decision in a similar case involving the same rules and provisos.