M/S.Som Pan Products Pvt. Ltd vs Cce, Delhi-Ii

IN THE CUSTOMS, EXCISE AND SERVICE TAX APPELLATE TRIBUNAL, NEW DELHI, PRINCIPAL BENCH NEW DELHI

Date of Hearing/Decision:11.09.2015

Excise Appeal No.E/55768, 55769/2014 and 55770/2014-EX(DB)

[Arising out of Order-in-Appeal No. 16/2014-15 dated 1.9.2014 passed by the Commissioner of Central Excise, Delhi-II].

Shri Vinay Vohra, Director

M/s.Som Pan Products Pvt. Ltd.. Appellants

Indra Deo Tripathi, Director

Vs.

CCE, Delhi-II Respondent

Appearance:

Rep. by Ms. Seema Jain, Advocate for the appellant.

Rep. by Shri S. Naunthuk, AR for the respondent.

For approval and signature:

Honble Shri Ashok Jindal, Member (Judicial)

Honble Shri B. Ravichandran, Member (Technical)

1 Whether Press Reporters may be allowed to see the Order for publication as per Rule 27 of the CESTAT (Procedure) Rules, 1982?

2 Whether it should be released under Rule 27 of the CESTAT (Procedure) Rules, 1982 for publication in any authoritative report or not?

3 Whether Their Lordships wish to see the fair copy of the Order?

4 Whether Order is to be circulated to the Departmental authorities?

Coram: Honble Shri Ashok Jindal, Member (Judicial)

Honble Shri B. Ravichandran, Member (Technical)

Final Order No.52951-52953/2015 dated:11.09.2015

Per Ashok Jindal:

The appellants are in appeals against the impugned order demanding duty of Rs.3,93,44,000/- from M/s. Som Pan Products (P) Ltd. and imposing penalty of Rs.20,00,000/- on one of the applicants.

2. The facts of the case are that the appellant is engaged in the manufacture of Pan Masala containing tobacco commonly known as gutka. The appellant were paying duty under compounded levy scheme as per Pan Masala Packing Machines (Capacity Determination and Collection of Duty) Rules, 2008. On examining the records for the month of March, 2011, Feb.2012, March, 2012, May 2012 and June 2012, it has been noticed that the appellant have paid central excise duty on prorata basis or for the period of production/manufacturing of the said goods, during the last days of the month, or in the following month, therefore, the applicant has contravened the provisions of PMPM Rules, 2008 and consequently, the demand was calculated as under:-

Month No.of machines operated during the month Period of manufacturing of notified goods Total working days MRP Rate of Duty per machine Duty payable for entire month Duty paid on pro rata basis March,2011 11 18.3.2011 to 31.03.2011 14 Rs.1 12.5 L 137.5 L 62.10 L Feb, 2012 5 16.02.2012 to 29.02.2012 14 Rs.2 24 L 120 L 57.93 L March,2012 12 16.03.2012 1 10 machines Rs.1 12.5 L and 24 L 89.29 L 132.35 L

17.03.2012 to

31.03.2013

Budgetary change w.e.f.

17.03.2012 15

MRP & 2 machines of MRP Rs.2 19 L and 36 L 126.77 L 87.74 L May,2012 5 16.05.2012 to 31.05.2012 16 4 machines of Gutkha (MRP Rs.2) & one machine of Pan Masala (MRP Rs.2/-) 36 L for Gutka 26 L for Pan Masala 170L 90.00 L June, 2012 5 16.06.2012 to 30.06.2012 15 MRP Rs.2/-

36 L

180L 430.12 L Total

823.56 L

3. Consequently, the differential duty was demanded from the appellant and penalty on the main appellant and co-appellant were also imposed. Aggrieved from the said order, the appellant is before us.

4. Ld. Counsel appearing for the appellants submits that as per Rule 10 of the PMPM Rules, 2008, in case, the factory did not produce the notified goods during any continuous period of 15 days or more, duty calculated on proportionate basis shall be awarded in respect of such period, provided the manufacturer of such goods files an intimation to that effect with the concerned authorities. In this case, it is not disputed that the appellant has intimated in advance and their machines were not working more than 15 days continuous period during the impugned period. As per the Rule 7 of the said Rules, duty is payable in advance on 5th day of the same month but in this case, on 5th day of the same month, machines were lying sealed by the department and no production on those machines have been done. Therefore, as per Rule 10 of the said Rules, the appellant is entitled to pay duty on proprata basis. Therefore, the impugned demands are not sustainable.

5. To support her contention, she relies on the decision of the Honble High Court of Delhi in the case of Shakti Fragrances Pvt. Ltd. in CEAC 29/2015 dated 5.8.2015, Shri Flavours Pvt. Ltd. Vs. CCE, Delhi-IV reported in 2014 (304) ELT 441 (Tribunal-Delhi) and in the case of Kay Fragrance vide Final Order No.50223-50232/2015 dated 21.01.2015.

6. On the other hand, ld. AR submits that the appellant were required to pay duty on 5th day of the month if at all, the machines being closed for more than 15 days. In that case, the appellant can file rebate claim for the period when the machines remain closed for more than 15 days. Therefore, the appellant are liable to pay duty first, if at all they have a claim of abatement as per Rule 10. The same can be filed by way of claim of abatement.

7. Heard the parties. Considered the submissions.

8. In this case, closure of the machines for more than 15 days is not in dispute. Moreover , this fact is also not in dispute that on 5th day of the same month, the machines were not working. Therefore, in the light of the decision in the case of Kays Frgrance Private Ltd.& Ors. (supra), we hold that the appellant is not required to first pay duty for whole of the month and then make claim of abatement. The appellant is required to pay duty for the days for which the machines were operating and only interest for the period from due date to the day on which the adjusted duty chargeable was paid would be leviable. This Tribunal arrived at the decision in the case of Kays Frgrance Pvt. Ltd. (supra) by relying on the decisions in the case of Padma Balaji Steel Pvt. Ltd. Vs. CCE, Coimbatore reported in 2009 (246) ELT 255 (Tribunal-Chennai) and in the case of Steel Industries of Hindustan reported in 2013 (293) ELT 191 (Allahabad), wherein the Honble High Court held that claiming the abatement for closure period depositing the duty for the whole month was not a pre-condition under Rule 96ZB of the Central Excise Rules, 1944. Therefore, we hold that the appellant has paid duty correctly but they are liable to pay interest for the period from the due date to the date they adjusted duty chargeable was paid. With these terms, the appeal filed by M/s. Sompan Product Pvt. Ltd. is disposed of. We also hold that in such a situation no penalties are leviable on the appellants. Accordingly, penalties on all the appellants are set aside. Consequently, the appeals are disposed of in the above terms.

[operative portion of the order already pronounced in the court]

( Ashok Jindal )

Member (Judicial)

( B. Ravichandran)

Member (Technical)

Ckp.

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