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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 ..... ha falling under CETA 2403990 - Period of dispute is 1st July 2008 to 16th July 2008 - Appellants took over the present manufacture unit from M/s Jalaram Industries, Bangalore, who surrendered their registration certificate and intimated the Department about their stopping of production work at the closing hours on 15.11.2008 - Held that:- when it is found that the appellants are entitled to the abatement, the demand of ₹ 78,75,000/- confirmed by the impugned order under Section 11A of Central Excise Act read with Rule 9 of PMPM Rules 2008 does not stand scrutiny of law and is hereby, therefore, set aside. Demand of interest - Appellants pleaded that as they were not knowing when they will commence production, they paid duty for the whole month manufacture when they commenced production, which in this case is 17th July (after making adjustments for the abatement) - Held that:- the laws and rules are same for everyone, whether it is the appellants or others, who are in the industry of manufacturing pan masala or other such items. The appellants cannot take the plea of not knowing when it will commence production when others in the same industry are to follow the same rules; ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... y of ₹ 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 2OO8 does not arise as only at much later point of time, it was decided to seek desealing of machine(s) and for the remaining days of the month duty stood discharged on 17.07.2008 covering the period of 17.07.2008 to 31.07.2008. iii. The Appellants stand in this regard is vindicated by the decision of the Hon'ble CESTAT, Principal Bench, New Delhi in the case of Trimurthi Fragrance (P) Ltd., and others V/s Commissioner of Central Excise, New ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... sing 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 were asked to give their reply/submissions as below: a. As to why duty of ₹ 78,75,000/- short paid be not demanded from the noticee appellant under Section 11A of Central Excise Act 1994 read with Rule 9 of Pan Masala Packing Machines (Capacity Determination and Collection of Duty) Rules 2008. b. As to why Interest on duty amount of ₹ 78,75,000/- short paid during July 2008 be not demanded and recovered under ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 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 stock Register. There was no stock Further, Central Excise Officers sealed packing machines found in the premises on 02.07.2008 which is evident from the verification certificate as on 02.07.2008 which is to the following effect: In response to letter dated 2nd July 2008 of M/s Jalaram Industries, intimating the closure of factory, the premises of the factory wa ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... n 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 of production and sealing of machines. 7.3 The appellants submit that the officials of the Bangalore ll Commissionerate simply chose to issue the notice by recourse to erroneous interpretation of the provisions of PMPM Rules as also the object underlying the capacity determination for fixation of duty liability and in doing so merely by relyin ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... here 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 wholly inapplicable in so far as the appellants are concerned when intimation of stoppage of activity for maintenance on 30.6.2008 was made on 27.6.2008 itself, followed by the visit of the officials and true observance of said position as true on 1.7.2008 at the time of their visit coupled with intimation dated 1.7 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... pellant 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 manufacturer of such goods files an intimation to this effect with the Deputy Commissioner of Central Excise or the Assistant Commissioner of Central Excise, as the case may be, with a copy to the Superintendent of Central Excise, at least seven days prior to the commencement of said per ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... regards, the dispute for the month of March 2011, in respect of which the duty demand confirmed is ₹ 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 assessee would be required to pay proportionate duty only for the number of days for which the unit were functioning. (emphasis supplied). Therefore, so far as the duty demand of ₹ 32,25,805/- is concerned, the same is prima facie not sustainable. Here ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... es 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 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 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e 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 ₹ 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 ₹ 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 liable to pay the interest for the period of late deposit of duty. In this regard para 12 of the decision of Hon ble Delhi High Court is reproduced below: 12. On a collective reading of Rules 9 and 10 of the ..... X X X X Extracts X X X X X X X X Extracts X X X X
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