Zemini Marketing Company Vs Commissioner of Central Goods and Service Tax (CESTAT Mumbai)
CESTAT Mumbai held that demand of duty on manufacture of pan-masala/gutka cannot be sustained since there was no evidence which proved that manufacturing activity took place before installation of pouch packing machine.
Facts- The present appeals are directed against the Order-in-Original passed by Commissioner of Central Excise, Kolhapur. Vide the said impugned order dated 26.11.2012, Central Excise duty demand of Rs. 8,75,00,000/- was confirmed u/s. 11A(2) of the Central Excise Act, 1944 read with Rules 7, 17(2) and 18 of the Pan Masala Packing Machines (Capacity Determination and Collection of Duty) Rules, 2008 (for short, ‘the Rules of 2008′), along with interest u/s. 11AB/11AA of the Act of 1994, read with second proviso to Rule 9 of the Rules of 2008, on the appellant Shri Rajendra Babulal Malu, Managing Director of M/s Shree Venkateshwara Pan Masala Industries Pvt. Ltd. (SVPMIPL).
Conclusion-Held that if the manufacturer is found to be operating without obtaining registration, then it has to be deemed that the manufacturing activity was taking place therein from the First day of April of the financial year, in which the unit was not found to be registered. However, if the manufacturer is in a position to demonstrate the actual date of commencement of production or clearance of goods, then the deeming provision under the said sub-rule would not apply. In the present case, the evidences available on record clearly show that the machines in fact were installed on 16.05.2011; and trial production was commenced by Shri Rajendra Malu w.e.f. 16.05.2011. Therefore, demand of duty would only be confined for the period from 16.05.2011 till 18.05.2011. However, as there was no clearance of goods during such period, owing to the reason of trial production, we do not find any ground to upheld penalty imposed on the said appellant in the impugned order.
