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2025 (4) TMI 814 - AT - Central ExciseCalculation of duty payable by the appellant under Rule 8 or the 4th Proviso of Rule 9 of the Chewing Tobacco and Unmanufactured Tobacco Packing Machines (Capacity Determination and Collection of Duty) Rules 2010 - abatement of duty under Rule 10 due to non-production for a continuous period of more than 15 days - effective rate of enhancement of duty. Whether in the facts and circumstances of the case the duty shall be payable by the appellant under Rule 8 of Chewing Tobacco and Unmanufactured Tobacco Packing Machines (Capacity Determination and Collection of Duty) Rules 2010 or 4th Proviso of Rule 9 of the said Rule or not? - HELD THAT - The issue in these appeals have been dealt by this Tribuinal in the case of Trimurti Fragrances Private Limited Vs. Commissioner of Central Excise Delhi III 2015 (8) TMI 34 - CESTAT NEW DELHI wherein this Tribunal has observed that The appellant in this case had used the four new machines installed w.e.f. 24-7-2013 for manufacture of the pouches of the new RSP - Rs. 4 per pouch which was not being earlier manufactured by them and therefore the provisions of this Proviso would be squarely applicable. Therefore in respect of these four machines the duty at the rate applicable for the MRP of Rs. 4 would be chargeable only for 8 days from 24th July to 31st July and not for the entire month. The appellant have discharged duty liability on this basis only. Therefore we hold that the duty demand of Rs. 1, 51, 35, 483/- confirmed against the appellant on the basis that in respect of these 4 machines the duty would be chargeable for the whole month is not sustainable. In the case of Arora Tobacco Private Limited Vs. Commissioner of Central Excise Service Tax Jaipur I 2019 (1) TMI 901 - CESTAT NEW DELHI this Tribunal relying on the decision of the Hon ble Gujarat High Court in the case of M/s Thakkar Tobacco Products Private Limited 2015 (2) TMI 606 - CESTAT AHMEDABAD held that the duty shall be payable in terms of 4th Proviso to Rule 9 of the Rules. The appellant is liable to pay duty in terms of 4th Proviso to Rule 9 of the Rules. Effective date of enhanced rate of duty - HELD THAT - The duty is not payable on enhanced rate of duty w.e.f.17.03.2012 in the Appeal No.E/75381/2014 in terms of Proviso 5 of Rule 9 ibid as the said proviso does not contemplate the scenario where the manufacturer permanently discontinues manufacture of the goods on the said retail sale price during the month. As the appellant has paid the duty in terms of 4th Proviso to Rule 9 of the Rules therefore no demand is sustainable against the appellant. Conclusion - i) The appellant is liable to pay duty in terms of 4th Proviso to Rule 9 of the Rules. ii) The appellant is entitled to abatement under Rule 10 for the non-production period from 15.03.2012 to 31.03.2012. iii) The enhanced duty rate effective from 17.03.2012 was not applicable as production had ceased before this date. Appeal disposed off.
1. ISSUES PRESENTED and CONSIDERED
The core legal issues considered in this judgment are:
2. ISSUE-WISE DETAILED ANALYSIS Issue 1: Calculation of Duty under Rule 8 vs. 4th Proviso of Rule 9 Relevant Legal Framework and Precedents: The legal framework revolves around the Chewing Tobacco and Unmanufactured Tobacco Packing Machines (Capacity Determination and Collection of Duty) Rules, 2010, particularly Rules 8, 9, and 10. The Tribunal referred to previous judgments, including Trimurti Fragrances Pvt. Ltd. vs. Commissioner of C. Ex., Delhi-III and S.A. Freshners Pvt Ltd vs. Commissioner of Central Excise New Delhi, which interpreted the application of these rules. Court's Interpretation and Reasoning: The Tribunal examined whether the duty should be calculated based on the maximum number of machines operated on any day of the month (Rule 8) or on a pro-rata basis as per the 4th Proviso of Rule 9, which applies when manufacturing of goods of a new retail sale price commences or existing ones are discontinued. Key Evidence and Findings: The appellant operated different machines for varying days within the month and discontinued production entirely from 15.03.2012. The Tribunal found that the 4th Proviso to Rule 9 was applicable, allowing for recalculation of duty on a pro-rata basis. Application of Law to Facts: The Tribunal applied the 4th Proviso of Rule 9, concluding that the appellant's duty should be recalculated based on the number of days each machine was operational. Treatment of Competing Arguments: The Revenue argued for the application of Rule 8, but the Tribunal found this would render the 4th Proviso to Rule 9 redundant, contrary to legal principles. Conclusions: The Tribunal concluded that the appellant's duty should be calculated under the 4th Proviso to Rule 9, not Rule 8. Issue 2: Entitlement to Abatement under Rule 10 Relevant Legal Framework and Precedents: Rule 10 provides for abatement of duty when a factory does not produce goods for a continuous period of 15 days or more, provided certain conditions are met. Court's Interpretation and Reasoning: The Tribunal considered whether the appellant's factory closure from 15.03.2012 to 11.04.2012 qualified for abatement under Rule 10. Key Evidence and Findings: The appellant had notified the authorities and sealed the machines as required. The Tribunal found the conditions for abatement were met. Application of Law to Facts: The Tribunal applied Rule 10, granting abatement for the period of non-production. Treatment of Competing Arguments: The Revenue did not dispute the closure period but contested the application of abatement. Conclusions: The Tribunal ruled in favor of the appellant, granting abatement for the specified period. Issue 3: Applicability of Enhanced Duty Rate from 17.03.2012 Relevant Legal Framework and Precedents: The 5th Proviso of Rule 9 addresses duty rate revisions during a month. Court's Interpretation and Reasoning: The Tribunal considered whether the enhanced rate applied given the appellant's cessation of production before the rate change. Key Evidence and Findings: The appellant ceased production on 14.03.2012, before the rate change on 17.03.2012. Application of Law to Facts: The Tribunal found the enhanced rate did not apply as production was discontinued before the rate change. Treatment of Competing Arguments: The Revenue's argument for applying the enhanced rate was rejected based on the timing of the production cessation. Conclusions: The Tribunal concluded the enhanced duty rate was not applicable to the appellant. 3. SIGNIFICANT HOLDINGS The Tribunal held that the appellant's duty should be calculated under the 4th Proviso to Rule 9, not Rule 8, allowing for recalculation on a pro-rata basis. The appellant was entitled to abatement under Rule 10 for the non-production period from 15.03.2012 to 31.03.2012. The enhanced duty rate effective from 17.03.2012 was not applicable as production had ceased before this date. Significant legal reasoning included the interpretation that applying Rule 8 exclusively would render the 4th Proviso to Rule 9 redundant, which is impermissible. The Tribunal emphasized the need for harmonious construction of the rules, ensuring all provisions are given effect. The Tribunal set aside the demands against the appellant and allowed for the refund of excess duty paid, concluding that the appellant's appeals were justified.
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