Chandan Tobacco Co Vs C.C.E. & S.T.-Daman (CESTAT Ahmedabad)
CESTAT Mumbai held that demand under the provisions of Pan Masala Packing Machines (Capacity Determination and Collection of Duty) Rules, 2008 unsustainable as number of installed machines before and after replacement of machines remained same.
Facts- The appellant is engaged in the manufacture of Pan Masala and Pan Masala containing Tobacco (Gutka) falling under Chapter Sub–headings No. 21069020 and 24039990 of Central Excise Tariff Act, 1985.
The departmental officers of HPIU-V gathered various intimation/permission letters submitted by the assessee and the reports/ other relevant records from the jurisdictional Division Office, Jurisdictional Range office, as well as from the assessee, to investigate the correctness of the self–assessment and central excise duty payment made by the assessee.
It appears during the course of the investigation that the Appellant has submitted intimation/permission letters and filed a declaration in Form-1 on 09.04.2009/16.04.2009 with the Deputy Commissioner, Division –II, Silvassa and endorsed copies of the same to the Range office, in terms of Rule 6 (6) of the Pan Masala Packing Machines (Capacity Determination and Collection of Duty), Rules, 2008 for the addition of some new packing machines during the period of April -2009, June -2009 and July -2009 respectively. Appellant also paid a differential Central Excise Duty amount of Rs. 3,25,000/- in respect of two packing machines, converted from Pan Masala to Pan Masala Containing Tobacco (Gutka) during the Month of July 2009 on a pro rata basis from the date of conversion.
Further, it appeared that the Appellant submitted a revised declaration in Form-1 on 05.09.2008, 19.05.2009 with the department as per Rule 6(6) of the Pan Masala Packing Machines (Capacity Determination and Collection Duty), Rules, 2008 for “replacement” of some existing packing machines during the month of September 2008, February-2009, May -2009 and June -2009 respectively for the manufacture of aforesaid products.
Show cause notice was issued for the demand of Central Excise Duty under the provisions of Pan Masala Packing Machines (Capacity Determination and Collection of Duty) Rules, 2008 and under Section 11A(1) of the Central Excise Act, 1994 along with interest and also for penalties.
Conclusion- Provisions of Pan Masala Packing Machines (Capacity Determination and Collection of Duty) Rules, 2008 states that the duty is payable on the number of installed machines which are deemed to be operating machines. In the present matter the number of installed machines in the month remained the same before and after replacement of the machines. Therefore, the demand confirmed by the Learned Commissioner in instant case is legally not correct.
FULL TEXT OF THE CESTAT AHMEDABAD ORDER
The present appeal is directed against the impugned order-in-original No. DMN-EXCUS-000-COM-026-20-21 dated 06-10-2020 passed by the Commissioner, Central GST & Central Excise, Daman.
2. Briefly the facts of the present case are that the appellant are engaged in the manufacture of Pan Masala and Pan Masala containing Tobacco (Gutka) falling under Chapter Sub-headings No. 21069020 and 24039990 of Central Excise Tariff Act, 1985. The departmental officers of HPIU-V gathered various intimation/permission letters submitted by the assessee and the reports/ other relevant records from the jurisdictional Division Office, Jurisdictional Range office, as well as from the assessee, to investigate correctness of the self –assessment and central excise duty payment made by the assessee. It appears during the course of the investigation that Appellant have submitted intimation/permission letters and filed declaration in Form-1 on 09.04.2009/16.04.2009 with the Deputy Commissioner, Division –II, Silvassa and endorsed copies of the same to the Range office, in terms of Rule 6 (6) of the Pan Masala Packing Machines (Capacity Determination and Collection of Duty), Rules, 2008; for addition of some new packing machines during the period of April -2009, June -2009 and July -2009 respectively, for manufacture of the aforesaid products. Accordingly, new packing machines were installed in the production area of the appellant as permitted by the Jurisdictional Deputy Commissioner vide his office letter dated 15.04.2009, 15.06.2009 and 16.07.2009 respectively. Further, it was observed that during the said investigation the Appellant had paid Central Excise Duty amount of Rs. 87,50,000/- and Rs. 10,87,500/- in respect of new packing machines added during the months of April 2009 and June 2009 respectively, on pro-rata basis from their date of installation. The Appellant also paid differential Central Excise Duty amount of Rs. 3,25,000/- in respect of two packing machines, converted from Pan Masala to Pan Masala Containing Tobacco (Gutka) during the Month of July 2009 on pro-rata basis from the date of conversion. Further it appeared that Appellant have submitted revised declaration in Form-1 on 05.09.2008, 19.05.2009 with department as per the Rule 6(6) of the Pan Masala Packing Machines (Capacity Determination and Collection Duty), Rules, 2008 for “replacement” of some existing packing machines during the month of September 2008, February-2009, May -2009 and June -2009 respectively for manufacture of aforesaid products. The New packing machines were added in the production area of the appellant by removal of old packing machines as permitted by the jurisdictional officers. However, investigation reveal that the Appellant has not paid any Central Excise Duty in respect of the new packing machines added during the relevant month on the ground that the number of old packing machine have been replaced with equal number machines and the total number of installed packing machines remained unchanged during the said relevant months. Statements of Shri Surendra Chhajer, Proprietor of Appellant’s firm was recorded. It was alleged that in the instant case Appellant have contravened the statutory provisions of Rule 6(4),7,8,9 and 13 of the Pan Masala Packing Machines (Capacity Determination and Collection of Duty) Rules, 2008.
2.1 After the detail investigation, show cause notice dated 30.09.2009 was issued for demand of Central Excise Duty under the provisions of Pan Masala Packing Machines (Capacity Determination and Collection of Duty) Rules, 2008 and under Section 11A(1) of the Central Excise Act, 1994 along with interest and also for penalties. The above show cause notice was adjudicated by the Commissioner vide impugned Order-in-Original by which the Commissioner –
(a) confirmed the duty demand of Rs. 1,20,12,500/- against the appellant short paid during the months of April 2009 , June 2009 and July 2009,under proviso to Section 11A(10) of Central Excise Act, 1944,as made applicable vide Rule 18 of the Pan Masala Packing Machines (Capacity Determination and Collection of Duty) Rules, 2008 along with interest thereon under Section 11AB of Central Excise Act, 1944;
(b) confirmed the duty demand of Rs. 5,25,00,000/- against the appellant not paid on 42 number of new packing machines added in guise of replacement under proviso to Section 11A(10) of Central Excise Act, 1944,as made applicable vide Rule 18 of the Pan Masala Packing Machines (Capacity Determination and Collection of Duty) Rules, 2008 along with interest thereon under Section 11AB of Central Excise Act, 1944;
(c) imposed penalty of Rs. 3,20,00,000/- on the appellant under Rule 25 of Central Excise Rules,2002 read with Rule 17 of the PMPM Rules 2008
2.2 Against the above order of the Commissioner, the present appeal has been filed.
0.3 Shri N.K. Tiwari, learned Consultant appearing for the appellant submits that impugned order passed 12 years after issuance of show cause notice. As the impugned order was not passed within a reasonable time, the impugned order ought to be set aside on this ground alone. He placed reliance on following decisions:-
