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TMI Blog2016 (5) TMI 607X X X X Extracts X X X X X X X X Extracts X X X X ..... ufactured and sold by their predecessors namely M/s Jalaram Industries vide their letter dated 26.11.2008. In consequence, the appellant were issued show-cause notice dated 06.07.2009 for recovery of Rs. 78,75,000/- and interest thereon and for imposition of penalty. 2.2 Commissioner, Bangalore-I Commissionerate, by his order dated 09.04.2014 (date of issue) confirmed the demand of duty of Rs. 78,75,000/- alongwith interest and also imposed equivalent penalty of Rs. 78,75,000/-. The appellants are in appeal before this Tribunal for setting aside the order passed by the Commissioner of Central Excise Bangalore II Commissionerate. The learned advocate Shri S. Janaki Raman appearing for the appellant inter alia mainly submitted as follows: i. When there was no production in the unit during 01.07.2008 to 16.07.2008 and when they paid duty for the production between 17.7.2008 to 31.07.2008 no interest liability can be imposed on them. ii. In any case when the unit was closed on account of various factors which were beyond the control of the Appellants as has been explicitly mentioned and forming part of the records, payment of duty on or before 5th July 2008 for the month of July ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... sioner of Central Excise, Bangalore have been carefully considered. The appellants are manufacturing gutkha falling under CETA 2403990. The period of dispute is July 2008. 4.1 It is pointed out that appellants took over the present manufacture unit from M/s Jalaram Industries, Bangalore, who surrendered their registration certificate No. ACSPN1108NXM001 and intimated the Department about their stopping of production work at the closing hours on 15.11.2008 vide their letter dated 17.11.2008. 4.2 The appellants namely M/s Pan Parag India Ltd., Bangalore registered themselves with Central Excise Registration No. AAECP3930FXM004 dated 21.11.2008 for the same factory premises and took over all the packing machines, raw material from their predecessor M/s Jalaram Industries Ltd on 24.11.2008. The appellants had also given undertaking to discharge any central excise/service tax liabilities in case of the goods that were manufactured and sold by M/s Jalaram Industries, their predecessor, vide their letter dated 26.11.2008 and consequently the present proceedings were started against the appellants vide show-cause Notice No. C.No. V/24/15/31/09 Adjn B.III dated 06.07.2009 whereunder they ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... hat their predecessor namely M/s Jalaram Industries did not satisfy the requirement of Rule 10 of Pan Masala Packing Machines (Capacity Determination and Collection of Duty) Rules 2008. Their predecessor namely M/s Jalaram Industries had informed vide their letter dated 27.06.2008 to Assistant Commissioner of Central Excise, Yeshwanthpur, Bangalore regarding closure of unit for preventive maintenance on 30.06.2008 and in continuation thereof there was suspension of production on 01.07.2008 because of several factors like a) heavy moisture content in the raw material b) shortage of labour c) continued maintenance of 11 Nos. of pouch making machines; and further M/s Jalaram Industries, vide letter their dated 02.07.2008 to the Superintendent of Central Excise Range informed about stoppage of production who after verification were convinced about the closure of the Unit on 30.06.2008. This is clearly vouched by verification certificate dated 01.07.2008 concerning 20 packing machines with the following report: "At the time of visit there was no production of activity. The assessee explained that due to bad weather i.e. Rain they were not able to run the machines. Verified with Daily ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... hat the notice has been issued demanding duty, interest and proposing penalty on a wrong premise by erroneous interpretation of the provisions of PMPM Rules and on a situation in which the appellants were placed as the successor of M/s Jalaram industries, when the duty is not at all liable to be paid for the period in respect of which it has been demanded on account of the position that the predecessors during the relevant period did not do any production for a continuous period of more than a fortnight falling within the month of July 2008 concerning which not only an intimation had been made about closure of unit for maintenance with effect from 30.6.2008 and stoppage of production thereafter and the said communication had been followed up by the officials concerned by conducting due verification of cessation of production, stoppage of production activity non availability of stocks vide verification carried out on 1.7.2008 in furtherance of letter dated 30.6.2008 of M/s. Jalaram industries duly enforced by a protective action of sealing all the pouch making machines on 2.7.2008; there is no reason or justification for demanding the duty concerning such of those days of stoppage o ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... activities came to be revived only on 17.7.2008 ii. The Superintendent of Central Excise has on record observed as follows: "At the time of visit there was no production of activity. The assessee explained that due to bad weather i.e. Rain they were not able to run the machines. Verified with Daily stock Register. There was no stock" This fact was not disputed by the Department either in the show cause notice or discussed by the adjudicating authority in the order-in-original. iii. The learned adjudicating authority ought to have applied his mind that when Notification No. 38/2007-CE dated 19.12.2007 has been subsisting till it was recinded on 16.7.2008 in terms of Notification No. 44/2008, it does not stand to reason or merit to demand duty for the whole month of July 2008 by disregarding the valid claim of the appellant for the whole reason of which the impugned order is liable to be set aside. iv. The Learned Adjudicating Authority in any case ought to have seen that the prior intimations mentioned to in PMPM Rules which came into effect from 1.7.2008 had been insisted upon so as to preempt any claim of cessation of work in a retrospective manner and the same is who ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... submissions of both sides have been carefully considered. From the facts on record and the submissions of both the sides it is undoubtedly clear that the production started in the month of July 2008, i.e. on 17.7.2008 and continued till the last day of the month i.e. 31.07.2008. 9.1 The appellant is asking for abatement as per the provisions of PMPM Rules 2008 for the period when there was no production i.e. from 01.07.2008 to 16.07.2008. The Department/Revenue is refusing any abatement saying that the appellants (in fact their predecessors namely M/s Jalaram Industries) for whom the appellants took the responsibility as successor to honour the liability of payment of central excise duty, if any should have informed the Department in advance i.e. at least 7 days prior to commencement of closure as per provisions of Rule 10 of PMPM Rules 2008. In this regard, provisions of Rule 10 of PMPM Rules 2008 are quoted below: RULE 10. Abatement in case of non-production of goods. - In case a factory did not produce the notified goods during any continuous period of fifteen days or more, the duty calculated on a proportionate basis shall be abated in respect of such period provided the man ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... month, there is no need for the Unit to first pay the duty for the month by the due date i.e. 5th of the month and thereafter claim the abatement and refund. In this regard, the observations of the CESTAT in para 6 of the above order are reproduced below: "6. As regards, the dispute for the month of March 2011, in respect of which the duty demand confirmed is Rs. 32,25,805, there is no dispute that the unit was closed from 1st March 2011 to 16th March 2011 and had functioned only from 17.03.2011 to 31.03.2011. The Department does not dispute that the appellant would be eligible for abatement under Rule 10 of the PMPM Rules for the period of closure from 1st March 2011 to 16th March 2011. The only point of dispute is as to whether for claiming the abatement, the appellant should first pay the duty for the whole month by 5th March 2013 and should have thereafter claimed the abatement. We find that this issue stands decided in the appellants favour by the Tribunal's Final Order No. A-50223-50232/2015-Ex-PB dated 21.01.2015 wherein the Tribunal held that in such cases for claiming abatement it is not necessary that the assessee should pay duty for the whole month and that the ass ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ing the month on account of addition or installation of packing machines, the differential duty amount, if any, shall be paid by the 5th day of the following month : Provided also that in case a manufacturer permanently discontinues manufacturing of goods of existing retail sale price or commences manufacturing of goods of a new retail sale price during the month, the monthly duty payable shall be recalculated pro-rata on the basis of the total number of days in that month and the number of days remaining in that month counting from the date of such discontinuation or commencement and the duty liability for the month shall not be discharged unless the differential duty is paid by the 5th day of the following month and in case the amount of duty so recalculated is less than the duty paid for the month, the balance shall be refunded to the manufacturer by the 20th day of the following month : Provided also that if there is revision in the rate of duty, the monthly duty payable shall be recalculated pro-rata on the basis of the total number of days in that month and the number of days remaining in that month counting from the date of such revision and the duty liability for the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... y are to follow the same rules; the appellants therefore cannot claim any unfair advantage by taking this plea. Here the appellants delayed their payment for July by two days, when the Rule 9 of PMPM Rules 2008 fixes the responsibility of payment for the month of July as on or before 15th July 2008. There is clearly liability for payment of interest on the duty of Rs. 78,75,000/- which was paid after the due date in the month of July 2008. This liability of interest on the said duty of Rs. 78,75,000/- was confirmed by the impugned order at para 14.14.(c) and the same is hereby sustained under Rule 9 of PMPM Rules 2008 read with Sections 3A (2&3) of Central Excise Act 1944 is hereby sustained and the plea in this regard of the appellant is hereby rejected. Here the CESTAT Delhi's decision in the case of Trimurti Fragrance (P) Ltd (supra) supports the stand that appellant is liable to pay interest as per the provisions of PMPM Rules 2008 for the period of delay. In respect of liability of interest Hon'ble Delhi High Court in the case of CCE Delhi -I Vs Shakti Fragrances Pvt Ltd [2015(324)ELT 390(Del)] also held that wherever there is delay in payment of duty, the assessee would be li ..... X X X X Extracts X X X X X X X X Extracts X X X X
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