The Hon’ble Tripura High Court in case of M/S Dharampal Satyapal Ltd. v. Commissioner of Central Excise and Service Tax, Agartala [Central Excise Appeal No. 01/2018 & 02/2018, dated May 17, 2021] held that abatement of duty can’t be withheld solely on ground that Superintendent did not record that sealing was done in such a manner that machine could not be operated as it was not within the control of the Appellant in what manner the Superintendent passed an order after sealing the machine.
M/S Dharampal Satyapal Ltd. (“the Appellant”) is a manufacturer of Jarda Scented Tobacco. In terms of Section 3A of the Central Excise Act, 1944 (“the Central Excise Act”) read with Chewing Tobacco and Unmanufactured Tobacco Packing Machines (Capacity Determination and Collection of Duty) Rules, 2010 (“Tobacco Packing Machines Rules”) the Appellant was liable to pay excise duty on the installed capacity of manufacture instead of actual manufacture and clearance of goods.
The Appellant had installed one machine in its factory which was sealed and de-sealed at the Appellant’s request by the Excise authorities during the period between August 31, 2015 to November 06, 2015.
Following two orders passed while sealing the machine are relevant for discussion:
Hon’ble CESTAT, Kolkata– Rejected the Appellant’s claim for abatement for the period between October 1, 2015 to October 7, 2015 under Rule 10 of the Tobacco Packing Machines Rules on the ground that the machine was not uninstalled and sealed in such a manner that it cannot be operated as evident from the sealing order dated August 31, 2015 vide Order dated September 14, 2017 (“Impugned Order”)
Being aggrieved by the Impugned Order, this appeal has been filed.
Whether abatement of duty shall be allowed for the period between October 01, 2015 to October 07, 2015?
The Hon’ble Tripura High court in Central Excise Appeal No. 01/2018 & 02/2018, dated May 17, 2021, held as under:
Rule 6(5) of the Tobacco Packing Machines Rules:
“Rule 6 Declaration to be filed by manufacturer:
(5) The machines which the manufacturer does not intend to operate shall be uninstalled and sealed by the Superintendent of Central Excise and removed from the factory premises under his physical supervision.
Provided that in case it is not feasible to remove such packing machine out of the factory premises, it shall be uninstalled and sealed by the Superintendent of Central Excise in such a manner that it cannot be operated.”
Relevant portion of Rule 10 of the Tobacco Packing Machines Rules:
“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 three working 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 the packing machines so sealed cannot be operated during the said period...”
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