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TMI Blog2013 (4) TMI 1X X X X Extracts X X X X X X X X Extracts X X X X ..... the rules in this regard. Pan Masala and Gutka are notified under Section 3A(1) of the Central Excise Act, 1944 and by Notification No. 130/2008-C.E. (N.T.), dated 1-7-2008 the Central Government issued Pan Masala Packing Machines (Capacity Determination and Collection of Duty) Rules, 2008 [hereinafter referred to as 'the Rules']. These rules came into effect from 1-7-2008. In terms of Rule 6 of these Rules, a manufacturer manufacturing Pan Masala and Pan Masala containing tobacco called 'Gutka', was required to declare the number of single track and multiple track packing machines available in the factory, the number of such machines which are installed, and out of the machines which are installed, the number of machines which the manufacturer intends to operate, retail sale price of each type of Gutka and Pan Masala Pouches to be manufactured and also the details of each packing machine along with its identification no., the date of its purchase and the maximum speed at which the same can be operated. Rule 5 of the Rules mentioned the deemed production of number of pouches per machine per month for the pouches of different retail sale price. For example, for pouches of RSP upto ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... that in case of non-working of the installed packing machines during the month for any reason whatsoever, the same shall be deemed to be operating packing machines for the month. Rule 10 of the Rules provides for abatement in case the factory did not produce the notified goods during any continuous period of 15 days or more, subject to the condition that the manufacturer of such goods gives an intimation to this effect to the jurisdictional Asstt./Dy. Commissioner under intimation to the jurisdictional Superintendent of Central Excise at least three working days prior to commencement of the said period, who on receipt of such intimation, shall direct for sealing of all the packing machines available in the factory for the said period, in such manner these machines cannot be operated during such period. This rule also provides that during the period of abatement, no manufacturing activity whatsoever in respect of notified goods shall be undertaken and no removal shall be effected by the manufacturer. This rule provides that when a manufacturer intends to re-start the production of the notified goods, he shall intimate the jurisdictional Asstt./Dy. Commissioner of Central Excise of ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... med to be the operating machine. It is on this basis that a show cause notice dated 11-9-2009 was issued to the appellant for demand of allegedly short paid duty of Rs. 12,50,66,234/- along with interest and imposition of penalty on them under Section 11AC of the Central Excise Act, 1944 as well as Rule 17 of the Rules. Since the appellant had paid an amount of Rs. 3,13,21,622/- under protest, the show cause notice sought appropriation of this amount. This show cause notice was adjudicated by the Commissioner vide Order-in-Original No. 19/COMMR/2010, dated 24-10-2010 by which duty demand of Rs. 8,59,46,469/- was confirmed along with interest and amount of Rs. 3,13,21,629/- already paid was appropriated toward this demand. The Commissioner did not impose any penalty under Section 11AC of the Central Excise Act, 1944 or Rule 17 of the Rules. He also dropped the demand of Rs. 3,91,19,765/- as the same was held to be covered by the Order-in-Original No. 20/COMMR/NOIDA/2010, dated 24-12-2010. Against this order of the Commissioner, the Appeal No. E/784 of 2011 alongwith stay application No. E/ST/951 of 2011 have been filed. 2. Heard both the sides in respect of stay applications. ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... al hearing, that the abatement had been correctly allowed by the Dy./Asstt. Commissioner under Rule 10 as the appellant manufactures Pan Masala/Gutka of different MRPs and during the period of abatement, only the machines packing Gutka/Pan Masala of some particular RSPs had been shut-down and sealed for a period of 15 days or more, that if a manufacturer manufactures Gutka/Pan Masala pouches of different MRPs, for claiming abatement under Rule 10, the rule does not require that all the machines manufacturing Gutka/Pan Masala of different MRPs must be shut-down, sealed and made non-operational, that the impugned order dated 24-12-2010 passed by the Commissioner disallowing the abatement and confirming the duty demand of Rs. 3,91,19,765/- is also totally incorrect on merits, that the appellant have strong prima facie case and that in spite of this, they had already paid an amount of Rs. 3,13,21,622/-against the duty demand of Rs. 8,59,46,469/-, that the amount already deposited may be considered as sufficient for hearing of the appeals and the requirement of pre-deposit of balance amount of duty demand and interest may be waived for hearing of the appeals. 4. Shri B.K. Singh, l ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ance intimation has to be given to the jurisdictional Asstt./Dy. Commissioner as well as to the Central Excise Superintendent, who will seal all the machines. During the period of stoppage, the manufacturer can neither manufacture any Gutka/Pan Masala nor can make any removals. The appellant's plea that if a manufacturer manufacture Gutka/Pan Masala of different RSPs and if he stops the production of Gutka/Pan Masala pouch of a particular RSP for a period of 15 days or more, he can still claim abatement without stopping the production and clearances of the Gutka/Pan Masala of other RSPs, is totally wrong and contrary to the provisions of Rule 10. The Commissioner has, therefore, correctly confirmed the duty demand of Rs. 3,91,19,765/-. Shri B.K. Singh, ld. Jt. CDR, therefore, pleaded that the appellant have no case at all and hence, this is not a case for waiver from the requirement of pre-deposit and the amount already paid by them of Rs. 3,13,21,622/- is not sufficient to safeguard the interests of Revenue. 5. We have carefully considered the submissions from both the sides and perused the records. Coming first to the question of abatement, for the period of non-production ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... nly one particular RSP, he will not be entitled for abatement, if continues the production or clearances of Pan Masala/Gutka of other RSPs by operating those machines. We are of prima facie view that from the language of Rule 10 it is clear that for claiming abatement under Rule 10, there must be total stoppage of the machines which have to be sealed in such a manner that same cannot be operated and besides this, there should be no clearances of any specified goods during the period of stoppage of production for which abatement has been claimed. From the objectives of notifying the goods for assessment and collection of duty based on capacity of production, as mentioned in Section 3A(1) of the Central Excise Act, 1944 and from perusal of the Rules framed under Section 3A(1), it is clear that these rules Shave been framed keeping in view the widespread duty evasion by Pan masala/Gutka manufacturers and the provisions of various rules of Pan Masala Packing Machines (Capacity Determination and Collection of Duty) Rules, 2008 including Rule 10 thereof must be seen in this background. The interpretation of Rule 10 sought by the appellant would be not only against the provisions of this ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... a manufacturer commences manufacturing of goods of a new retail sale price during the month on an existing machine, it shall be deemed to be an addition in the number of operating packing machine for the month : Provided further that in case of non-working of any installed packing machine during the month, for any reason whatsoever, the same shall be deemed to be operating packing machine for the month. 6.2 From the perusal of the above mentioned rules, it will be seen that under Rule 7, the duty payable for a particular month is to be calculated by applying appropriate rate of duty specified in Notification No. 42/2008-C.E., to the number of operating packing machines in the factory during the month. From Rule 8, it is clear that even if the number of operating packing machines have been changed during the month or that some machines were not working during the entire month, the number of operative packing machines shall be taken as the maximum number of packing machines installed on any day during the month and even if, a machine was not working for certain periods in a month, the same shall be deemed to be operating packing machines for the entire month. Thus, if out of 1 ..... X X X X Extracts X X X X X X X X Extracts X X X X
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