M/S. Vikram Prasad Vinod Kumar vs C.C.E. & S.T. Allahabad

[Arising out of Order-in-Original No. 14/CE/APPL/ALLD/013 dated 16.07.2013 by the Commissioner of Customs, Central Excise & Service Tax (Appeals), Allahabad].

For approval and signature:

Honble Shri Ashok Jindal, Member (Judicial)

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?

M/s. Vikram Prasad Vinod Kumar .Appellants

Vs.

C.C.E. & S.T. Allahabad .Respondent

Appearance:

Shri Mayank Garg, Advocate for the Appellant

Shri R.K. Mishra, DR for the Respondent

CORAM:

Hon'ble Shri Ashok Jindal, Member (Judicial)

Date of Hearing: 17.06.2015

FINAL ORDER NO. 51988/2015-EX(SM)

Per Ashok Jindal:

The appellant is in appeal against the impugned order.

2. The facts of the case are that appellant is manufacturer of Pan Masala and paying duty under Pan Masala Packing machine (Capacity Determination and Collection of Duty) Rules, 2008. The factory of the appellant started on 08.08.2008. The duty liability was fixed as per Notification No.42/2008-CE(NT) dated 01.07.2008 to Rs.12,50,000/- per month. The appellant paid a sum of Rs. 9,67,742/- towards duty for the period 08.08.2008 to 31.08.2008. On the pretext that as they have been granted registration on 08.08.2008 therefore they are not required to pay duty for the period 01.08.2008 to 07.08.2008. The range superintendent asked the appellant to pay the amount towards duty of Rs. 2,82,258/- along with interest in compliance to provision to notification No.30/2008-CE(NT) dated 01.07.2008. The appellant paid the said amount under protest. Thereafter, appellant filed the refund claim which was rejected as time barred but this Tribunal vide Final Order set aside the order of denying refund claim and directed the Adjudicating Authority, if required, issue show cause notice and adjudicate the matter in accordance with law. In pursuant to the order of this Tribunal, the appellant got refund claim of Rs.2,82,258/- but a show cause notice was issued to the appellant dated 04.10.2012 to demand the short paid duty of Rs.2,82,258/- along with interest. The matter was adjudicated. Demand of duty was confirmed. Aggrieved from the said order, appellant is before me.

3. The appellant submits that a similar issue came up before this Tribunal in the case of Rajat Industries Pvt. Ltd.-2012 (284) ELT 581 (Tri Del) wherein the duty was paid by the appellant on pro rata basis for the period 04.05.2009 to 31.05.2009 as their unit was set up and started functioning only on 04.05.2009. In that case this Tribunal held that appellant is not required to pay duty for the period when the factory was not in existence. Therefore, they are not required to pay any duty at all as demanded in the impugned order.

4. On the other hand Ld. AR submits that the Rule for allowing pro rata basis payment of duty came through notification no. 08/2010-CE (NT) dated 27.02.2010 and same is applicable from the said date have no retrospective effect. Therefore, appellant is not entitled to take the benefit of payment of duty on pro rata basis.

5. Heard the parties. Considered the submission.

6. I find that the fact that appellants factory started only on 08.08.2010 is not in dispute and the appellant has paid duty on pro rata basis for the period 08.08.2008 to 31.08.2008. Therefore, the fact of the case in hand are identical to the facts in the case of Rajat Industries Pvt. Ltd (Supra). In the case of Rajat Industries Pvt. Ltd. (Supra) this Tribunal has held in para 10 as under:

10. In order to find answer to this question it would be useful to have a look on the relevant provisions of the Central Excise Act, relating to levy and collection of excise duty, section 3 of the Excise Avt is the main charging section which provides that there shall be levied and collected excise duty on excisable goods which are produced or manufactured in India. From this, it is evident that excise duty is an incidence of tax on production or manufactured of the goods. That being the case, it is difficult to sustain the plea that the appellant assessee can be charged excise duty for the period during which his unit had not even commenced the production. The department is seeking to justify the impugned order under Rule 9 of the PMPM rules of 2008 framed under Section 3A of the Central Excise Act. Section 3 A confers power on the Central Government to charge excise duty on the basis of capacity of production in respect of notified goods. The basic object of conferring such power on the Central Government is to prevent evasion of excise duty in respect of certain excisable goods with a view to safeguard the interest of revenue. This, does not mean that Section 3A confer power on the Government to frame the rules to charge excise duty for the period prior to the commencement of production. Therefore, in our view the impugned order confirming demand for first three days of May 2009 when the production had not even commenced cannot be sustained. In our aforesaid view, we find strength from the judgment of Punjab & Haryana High Court in the matter of Godwin Steels (P) Ltd. wherein while dealing with the similar issue of compounded levy scheme in relation to steel manufacturing unit it was held thus:-

3. After hearing the learned counsel for the parties, we are of the considered opinion that as the petitioners factory started production with effect from 17.11.1997 therefore, it was wholly unjust for the department to recover the duty for the whole month of November, during which, its factory had not commenced production. When the factory of the petitioner was not in production, then obvious, it is not liable to pay the duty during the period of non-producton.

7. Thereafter, this Tribunal set aside the demand of duty for the remaining period of month when the unit was not started functioning. Therefore, following the decision of Rajat Industries Pvt. Ltd. (Supra) I hold that appellant is not required to pay duty for the period 01.08.2008 to 07.08.2008.

8. With these terms, I do not find any merits in the impugned order. Same is set aside. Appeal is allowed with consequential relief if any.

(Dictated and pronounced in the open court)

(Ashok Jindal) Member (Judicial)

Bhanu

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E/60057/2013-EX(SM)