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TMI Blog2015 (8) TMI 34X X X X Extracts X X X X X X X X Extracts X X X X ..... on'ble High Court had held that for claiming the abatement for the period of closure of the factory, depositing duty for the whole month is not a pre-condition and that in such cases the duty would be required to be paid only for the number of days for which a factory was working. However, since the due date for payment of duty was 5th of the month and the appellant paid the duty only on 21.03.2011, the appellant in respect of the net duty payable by them, would be liable to pay interest on it as per the provisions of PMPM Rules for the period of delay. - appellant had commenced manufacture of new RSP w.e.f. 24.07.2013 on 4 new machines. The department invoking Rule 8 of the PMPM Rules has taken the stand that since with the installation of 4 new machines on 24.07.2013, the maximum number of operating machines has increased to 25, the duty would be calculated in respect of these machines for the whole month i.e. duty payable for July 13 in respect of pan masala pouches manufactured would be - "13 multiplied by the rate applicable to MRP of ₹ 1 + 4 multiplied by the rate applicable to MRP of ₹ 4". The stand of the appellant is that the duty payable in respect of the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... manufacturers of retail pouches of Gutkha, pan masala and chewing tobacco. They discharged their duty liability in respect of Gutkha / pan masala retail pouches manufactured by them under Pan Masala Packing Machines (Capacity Determination and Collection of Duty) Rules, 2008 (hereinafter referred to as PMPM Rules) and in respect of chewing tobacco retail pouches under Chewing Tobacco and unmanufactured tobacco packing machines (Capacity Determination and Collection of Duty) Rules 2010 (hereinafter referred to as CTUTPM Rules ). The dispute in this case is in respect of only two months - March, 2011 and July 2013. 1.2 During March, 2011, the appellant's unit was closed from 01.03.2011 to 16.03.2011. From 17.03.2011 to 31.03.2012 the factory was working. For the period from 01.03.2011 to 16.03.2011, the appellant had claimed abatement of duty in terms of Rule 10 of the PMPM Rules. In terms of PMPM Rules and CTUTPM Rules, an assessee is required to pay duty in respect of the goods to be produced during a month on the basis of the number of packing machines installed, by 5th of that month, and accordingly the duty liability for the month of March, 2011 was required to be discha ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... pect of the four new packing machines installed w.e.f. 24.07.2013 for packing of the pouches of MRP of ₹ 4 is to be paid for the whole month, and that the provisions of Fourth Proviso to Rule 9 would not be applicable. The duty demand of ₹ 1,51,35,483/- is on this basis. 1.5 The matter was adjudicating by the Commissioner vide Order-in-Original dated 29.04.2014 by which the duty demand of ₹ 1,83,61,288/- was confirmed against the appellant alongwith interest and beside this, while penalty of ₹ 91,80,644/- was imposed on the appellant company under Rule 17 of the PMPM Rules, penalty of ₹ 9,00,000/- each was imposed on Shri Pradeep Kumar Aggarwal and Shri Roshan Aggarwal, Directors of the company. Against this order of the Commissioner these appeals have been filed. 2. Heard both the sides. 3. Mrs. Seema Jain, Advocate, the ld. Counsel for the appellant, pleaded that so far as the first point of dispute as to whether in respect of the month of March, 2011, the appellant were required to first pay the duty for the entire month by the due date and then claim the abatement for the period of closure from first March, 2011 to 16th March, 2011 or whet ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... calculated is less than the duty paid for the month, the balance amount shall be refunded to the manufacturer by the 20th day of the following month, that Fourth Proviso to Rule 9 of the PMPM Rules is applicable to the new machines, as these machines were used for packing of the pan masala pouches of a new MRP, that in respect of these machines, there is no justification for demanding duty for the whole month by invoking Rule 8, that the Apex Court in the case of S. Sundaram Pillai Others vs. R. Pattabiraman Others reported in AIR 1985 SC 582 has held that the proviso to Rule which provides for certain exceptions to the Rule cannot be given an interpretation to make it otiose, that Hon'ble Bombay High Court in the case of Shree Satpuda Tapi Parisar Sahkari Sakhar Karkhana Ltd. vs. Union of India reported in 2014 (307) ELT 699 (Bom.) has held that the function of the proviso is to qualify the generality of the main provision by providing an exception and taking out as it were from the main provision, a portion, which but for the proviso, would fall within the main provision and that while construing a provision having a proviso, these have to be read together without making ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... gment of Hon'ble Allahabad High Court in the case of Steel Industries of Hindustan vs. CCE, Ghaziabad reported in 2113 (293) ELT 191 (ALL), wherein in respect of similar provisions regarding levy of duty on compounded basis in respect of iron and steel product, Hon'ble High Court had held that for claiming the abatement for the period of closure of the factory, depositing duty for the whole month is not a pre-condition and that in such cases the duty would be required to be paid only for the number of days for which a factory was working. We find that same view has been taken by this Tribunal in the case of Shree Flavers Pvt. Ltd. vs. CCE, Delhi-IV reported in 2014 (304) ELT 441 - Kuber Khani P. Ltd. vs. CCE, Rohtak (Final Order No. 54525/2014 dated 20th November, 2014) Shri Padma Balaji Steel Pvt. Ltd. vs. CCE, Koimbatore reported in 2009 (246) ELT 255 (Tri.Chennai) and also in the appellant's own case for the previous period decided by this Tribunals final order No.50223-50232/2015 dated 21.01.2015. In view of this the duty demand of ₹ 32,25,805/- would not be sustainable. However, since the due date for payment of duty was 5th of the month and the appellant pai ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... purpose of Rule 7 would be 21. If all the machines have been used for manufacture of the Pan masala gutkha pouches of only one RSP, there would be only one rate of duty and the duty payable would be the applicable rate per machine per month multiplied by the maximum number of machines operated during the month or any day. If, however, different machines have been used for manufacturing gutkha / pan masala pouches of different RSP slabs for which the per machine per month rate are different, the duty under Rule 7 would have to be calculated accordingly. Thus, if during a particular month gutkha pouches of four RSPs - P1, P2, P3 and P4 belonging to four different RSP slabs have been manufactured by using the machines N1, N2, N3 N4 respectively the total duty liability for the month would be P1 N1 + P2 N2 +P3 N3 + P4 N4. 8. Rule 9 of the PMPM Rules titled manner of payment of duty and interest provides that the monthly duty payable on notified goods shall be paid by 5th of the same month and an intimation in Form - 2 shall be filed with the Jurisdictional Superintendent of Central Excise before the 10th day of the same month. First proviso prescribes that for the month of Jul ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ese machines for the whole month i.e. duty payable for July 13 in respect of pan masala pouches manufactured would be - 13 multiplied by the rate applicable to MRP of ₹ 1 + 4 multiplied by the rate applicable to MRP of ₹ 4 . The stand of the appellant is that the duty payable in respect of the 4 new machines installed w.e.f. 23.04.2013 would be subject to the provisions of the Fourth Proviso to Rule 9 and accordingly, in respect of these four machines, duty would be chargeable only for the 8 days from 24.07.2013 to 31.07.2013. 9. Thus, point of dispute is as to whether the Fourth Proviso to Rule 9 would be applicable to Rule 7 read with Rule 8. As discussed above, it is Rule 7 which prescribes the formula for calculation of duty by applying the appropriate rate of duty as specified in the Notification No.42/2008-CE to the number of operating packing machines in the factory during the month, and Rule 8 specifies as to how number of operating packing machines is to be determined, and according to this Rule, the number of operating packing machine in a factory for a particular month shall be the maximum number of operating packing machine installed on any day during th ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e had used the four new machines installed w.e.f. 24.07.2013 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 ₹ 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 ₹ 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 and has to be set aside. 10. In view of the above discussion, the impugned order confirming duty demand of ₹ 32,25,805/- for March, 2011 and duty demand of ₹ 1,51,35,483/- for July, 2013 alongwith interest and equivalent penalty and also imposing penalty on its Directors Shri Pradeep Kumar Aggarwal and Shri Roshan Aggarwal is set aside . However, in respect of March, 2011, the appellant would be liable to pay interest on the net duty payable for this mo ..... X X X X Extracts X X X X X X X X Extracts X X X X
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