Satya Prakash & Co vs Cce, Lucknow

[Arising out of the OIO No.423-CE/LKO/2012 dt.26.9.12 passed by the CCE(Appeals), Lucknow)

Date of Hearing:23.02.2015

Date of Order:____________

For Approval &signature:

HonbleMr.Ashok Jindal, Member (Judicial)

1. Whether Press Reporter may be allowed to see the Order for publication as per Rule 27 of the CESTAT (Procedure) Rules, 1982? No 2. Whether it would be released under Rule 27 of the CESTAT (Procedure) Rules, 1982 for publication in any authoritative report or not? No 3. Whether their Lordships wish to see the fair copy of the order? seen 4. Whether order is to be circulated to the Department Authorities? Yes

Satya Prakash & Co. Appellant

Vs.

CCE, Lucknow Respondent

Appearance

Shri Kapil Vaish, Advocate- for the appellant

Shri A.k.Dhawan,A.R. - for the respondent

CORAM: HonbleMr.Ashok Jindal, Member (Judicial)

FINAL ORDER NO.50619/2015

Per Ashok Jindal :

The appellant is in appeal against the impugned order rejecting the rebate claim of Rs.7,12,500/- by the lower authorities.

2. The brief facts of the case are that the appellant is engaged in the manufacture of Branded Chewing Tobacco notified under section 3A (1) of Central Excise Act, 1944 and falling under Chapter Heading No.24039910 of Central Excise Tariff Act, 1985. During the course of scrutiny of Rorm-2 (revised) for the month of September, 2011 filed by the appellant under Rule 9 of Chewing Tobacco and Unmanufactured Tobacco Packing Machines (Capacity Determination and Collection of Duty) Rules, 2010, it was observed that the appellant had packed manufactured branded chewing tobacco with the help of 2 packing machines during the said period. In accordance with Rule 6(4) read with Rule 8 of Packing Machine Rules,2010, there were 2 operating packing machines installed in the factory premises of the appellant during the month. The Central Excise duty as prescribed vide Notification No.16/2010-CE dated 27.2.2010 as amended by vide Notification No.19/2010-CE dated 13.4.2010, was required to be calculated by the appellant under Rule 7 of the Packing Machine Rules,2010 and the same was required to be paid by 5th day of the same month (for machine operating for 1st day of the month) under Rule 9 ibid. However, it was noticed that:

(i) One single tract (without lime) packing machine for packing pouches of RSP (retail sale price) of Rs.2.00 (hereinafter called as First Machine) was operative for the period 1.9.2011 to 30.9.2011 and duty of Rs.14,25,000/- was deposited by the appellant vide GAR-7 No.0239 dated 3.9.2011, within the prescribed due date.

(ii) One single tract (without lime) packing machine for packing pouches of RSP of Rs.2.00 (hereinafter called as Second Machine) was operative for the period 16.9.2011 to 30.9.2011 and duty of Rs.14,25,00/- was deposited by the appellant vide GAR-7 No.02029 dated 4.10.2011, within the prescribed due date.

3. Subsequently, the appellant filed abatement claim for Rs.7,12,500/- on pro-rata basis, before the Assistant Commissioner, Central Excise Division, Farrukhabad, vide their letter dated 12.10.2011 for the period from 1.9.11 to 15.9.11 in respect of the non operative period of second machine.

4. The Adjudicating authority observed that the provisions of Rule 10 of Packing Machine Rules, 2010 are applicable in the case of the appellant. Since the appellant has produced/removed the notified goods with one single tract (without lime) packing machine (First Machine) for packing pouches of RSP of Rs.2.00 was operative for the period 1.9.2011 to 30.9.2011, therefore, the abatement claim for Rs.7,12,500/- for non-operation of second machine during 1.9.11 to 15.9.11 was not admissible as Appellant has not fulfilled the condition of completely stopping the manufacturing activity, because their machine remained operative during the said period. Accordingly, a show cause notice dated 14.12.11 was issued to the appellant as to why their abatement claim of Rs.7,12,500/- which was not in agreement with provisions of the relevant rules should not be rejected. Subsequently, vide the impugned Order-in-Original, the claim of abatement of duty of the appellant was rejected.

5. The Commissioner (Appeals) has confirmed the order of rejection of rebate claim by the assessment Commissioner. Aggrieved with the said order, the appellant is before me.

4. The contention of the ld.Consultant is that as per Notification No.16/10 which specifies the rate of duty per packing machine per month and the same cannot be charged for full month in case the same remained operative for part of the month in terms Chewing Tobacco and Unmanufactured Tobacco Packing Machines (Capacity Determination and Collection of Duty) Rules, 2010 and the assessee would not be liable to duty for the entire month even machine was operative for the part month.

5. Ld.AR reiterated the findings of the lower authorities.

6. Heard the parties and considered the submissions.

7. In this case, I find that the appellant is manufacturer of branded chewing tobacco and opted for paying duty. The same is notified in terms of Section 3A of Central Excise Act, 1944 as per rules framed under Chewing Tobacco of Unmanufactured tobacco Packing Machine (Capacity Determination and Collection) Rules, 2010. Rule 10 is relevant to the facts of this case which is reproduced here as under:-

Rule 10 of Pan Masala Packing Machine Rules, 2008

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 period, who on receipt of such intimation shall direct for sealing of all the packing machines available in the factory for the said period under the physical supervision of Superintendent of Central Excise, in the manner that these cannot be operated during the said period:

Provided that during such period, no manufacturing activity, whatsoever, in respect of notified goods shall be undertaken and no removal of goods shall be effected by the manufacturer:

Provided further that when the manufacturer intends to restart his production of notified goods, he shall inform to the Deputy Commissioner of Central Excise or the Assistant Commissioner of Central Excise, as the case may be, of the date from which he would restart production, whereupon the seal fixed on packing machines would be opened under the physical supervision of Superintendent of Central Excise.

From the perusal of this Rule, it is clear that -

(a) for stoppage of production must be for a continuous period of 15 days or more, the intimation about it must be given to the Asstt./Dy. Commissioner and also to the Central Excise Superintendent at least 3 days in advance, who shall seal all the machines available in the factory in such a manner that the same cannot be operated during the period of stoppage;

(b) during the period of stoppage, no manufacturing activity whatsoever in respect of notified goods shall be undertaken and no removal of the good shall be effected by the manufacturer.

Thus, when a manufacturer of Gutka/Pan Masala is manufacturing Gutka/Pan Masala pouches of different RSPs and for a certain period of 15 days or more, he stops the production of only one particular RSP, he will not be entitled for abatement, if continues the production or clearances of Pan Masala/Gutka of other RSPs by operating those machines. We are of prima facie view that from the language of Rule 10 it is clear that for claiming abatement under Rule 10, there must be total stoppage of the machines which have to be sealed in such a manner that same cannot be operated and besides this, there should be no clearances of any specified goods during the period of stoppage of production for which abatement has been claimed. From the objectives of notifying the goods for assessment and collection of duty based on capacity of production, as mentioned in Section 3A(1) of the Central Excise Act, 1944 and from perusal of the Rules framed under Section 3A(1), it is clear that these rules Shave been framed keeping in view the widespread duty evasion by Pan masala/Gutka manufacturers and the provisions of various rules of Pan Masala Packing Machines (Capacity Determination and Collection of Duty) Rules, 2008 including Rule 10 thereof must be seen in this background. The interpretation of Rule 10 sought by the appellant would be not only against the provisions of this rule but would also be against the smooth functioning of the system of collection of duty from Gutka/Pan masala units, as envisaged under these Rules. It appears that it is not the case of the appellant that during the period of abatement, there was total stoppage of production and clearances.

9. There is very much clear that there should be complete stoppage of the machine which is not in the matter in hand. Therefore, I find that both the lower authorities have concluded correctly that the appellant has not satisfied the condition of the grant of abatement as production in the factory of the notified goods was in operation. Therefore, I hold that the appellant is not entitled for abatement.

10. Consequently I do not find any infirmity in the impugned order and the same is upheld. The appeal filed by the appellant is dismissed.

(pronounced in the open court on _______________________)

(Ashok Jindal)

Member (Judicial)

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