TMI Blog2022 (7) TMI 1062X X X X Extracts X X X X X X X X Extracts X X X X ..... the Central Government can charge the excise duty on the basis of capacity of production in respect of notified goods and admittedly, the cigarette is not notified goods under Section 3A, therefore, apart from Section 3A, Shri Prasad has failed to point out any provision under the Act and Rules under which the Central Government can insist the manufacture to operate the machine up to 50% of its total production capacity machine hours. The respondents have completed the search and investigation and thereafter issued a show cause notice to the petitioner, therefore, there is no need to keep the machine and DG sets under seal. The respondents have already assessed the capacity of the machine by calling Chartered Engineers. When the respondents have already assessed the capacity then there is no question of seeking a declaration about the capacity of the machine under seal from the petitioner. Since there is no mandatory provision in the statute to give production as per the capacity of the machine then the respondents cannot compel any manufacturer to give a declaration or run the factory up to its 50% capacity - The Excise officer is posted there 24x7 hours to check the productio ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... and so far as GST is concerned the levy is governed under the Central Goods Service Tax Act, 2017 and M.P. goods and Service Tax Act, 2017. [3] Section 3 of the Central Excise Act, 1944 deals with the levy of duty on goods which are produced or manufactured. Rule 94 of the Central Excise Rules, 1944 mandates the manufacturer of tobacco products to maintain a record of production and dispatch in the manner specified therein. Rule 6 of CE Rules, 2017 mandates that the assessee shall himself assess the duty payable on any excisable goods shall be removed from a factory or a warehouse except under an invoice signed by the owner of the factory or his authorized agent and such invoice shall also be countersigned by the Inspector of Central Excise or the Superintendent of Central Excise. According to the petitioner since the product cigarette is a sensitive matter for levying excise duty, therefore, the respondents in order to monitor the production and sale have deputed an adequate number of Excise Officers at the premises round the clock 24 X 7. [4] The respondents have issued trade notice 40/95 dated 25.08.1995 whereby the instructions were given for the procedure to be followe ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... er authorities are awaited. Thereafter vide letters dated 25.11.2020 and 26.11.2020 the Superintendent and Assistant Commissioner demanded some details as a condition before de-sealing. According to the petitioner, all the details were already on record, which has been seized by the respondent. Despite furnishing all the details, the respondents have not de-sealed the machines and DG sets due to which the petitioner was unable to start the production to date. [9] Vide impugned notice dated 27.05.2021 (Annexure P/1), the request for de-sealing of the machine and DG sets have been declined by the respondents as the petitioner did not file a fresh declaration in compliance with Trade Notice 04/2020-2021 dated 18.01.2021. Being aggrieved by the aforesaid denial, the petitioner has approached this Court by way of this petition challenging not only the validity of the order dated 27.05.2021 as well as the Trade Notice No.04/2020-21 dated 18.01.2021. Submissions of the petitioner s counsel [10] Shri Abhinav Malhotra, learned counsel appearing for the petitioner submitted that the respondents have kept the machine and DG under seal arbitrarily for an indefinite period for which ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e and no single cigarette which is ready for sale can be taken out of the factory unless the tax on it is paid and audit is cross verified and certified by the Superintendent under Rule 11 of the Rules. Finally learned counsel submitted that the the action of the respondents to keep the petitioner's machines in the factory sealed on the ground of non-compliance with the Trade Notice dated 18.01.2021 is illegal and violative of the petitioner's fundamental rights under Article 14, 19(1) (g) and 21 of the Constitution, in addition, to the impugned Trade notice being contrary to the provisions of the Act and the Rules be set aside. Reply of the respondents [13] Initially, the respondents filed a preliminary reply questioning the maintainability of the Writ Petition, however, as per direction issued by the Court, a parawaise reply has also been filed. The respondents have not disputed the search conducted on the premises and the sealing of machines and DG sets during the investigation carried out by GST Intelligence. In order to justify the action, the respondents are contending that the search conducted in furtherance of Trade Notice dated No.02/2015 as the key persons ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... y imposed under the Act. Submissions of respondents counsel [17] Shri Prasanna Prasad learned counsel appearing on behalf of the respondents has argued that the manufacturing and sale of cigarettes is a sensitive commodity under the Central Excise Act and GST Act. It also attracts National Calamity Contingent Duty (NCCD). The petitioner has a checkered history as one case of clandestine manufacturing and clearance of cigarettes was registered in the year 2011-12, wherein duty demand of Rs. 28,39,43,195/- was confirmed against the petitioner. The respondents are taking more care and caution by seeking a declaration from the petitioner about the production from sealed machines which should not be less than 50% of its capacity. If the machines and DG sets are de-sealed, the petitioner would again indulge in the manufacturing of cigarettes and the future possibility of evasion of the excise duty and GST cannot be ruled out. It is further submitted by the learned counsel that a detailed show cause notice has been issued to the petitioner and now the matter is under adjudication. The authority has doubted the conduct of 67 Excise Officers who were posted round the clock in the u ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... hines installed the machine will be sealed after the production is over by the Inspector or any other officer authorized by the Commissioner. This seal shall be removed by the authorised officer scheduled when the production is scheduled to start on the next working shift/day. It is clarified that the machines should be sealed in such a manner that no commercial production is possible without removing such seal. 4.2 In case the unit does not propose to operate any of the machines for the day or for any specified/expected period the same should be informed in writing along with the reasons to the Deputy/Assistant Commissioner having jurisdiction over the manufacturing unit with a copy of jurisdictional Range Officer, such machine shall be sealed in accordance with the procedure laid in Para 4.2. above. 4.3 The authorized representative of the manufacturing unit shall inform the officer posted in the unit in writing well in advance about the time and date they intend to start the machine for production and get the machine de-sealed by the Range Officer or any other authorized Central Excise Officer. 4.4. In case the installed machines require any repair/maintenance, such mac ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... petitioner is about clause 6.3 which is produced below:- '' Whether any machine is operating at a capacity lower than 50% of total machine hours in a shift available or less than 50% of the declared capacity for a machine installed, the machine will be sealed after the production record is submitted on the next day. The de-sealing of the said machines will be done only after the written undertaking by the manufacturer that they will utilize at least 50% of the total machine hours in a shift and the declared capacity of the machine. Further, if the condition then the machines will be sealed till further orders by the jurisdiction Deputy/Assistant Commissioner.'' 22. In our view, the above clause does not apply in the case of the petitioner as the impugned action of sealing was done under Trade Notice No.02/2015 dated 04.02.2015 which was applicable at the relevant point of time. But the respondents are denying the de-sealing of the machines and DG sets under Trade Notice dated 18.1.2021 hence we shall also examine the validity of the above clause of this latest Trade Notice. After hearing the learned counsel for the respondents who have failed to highlight a ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... hrs and check the capacity of production in the factory before removing the goods. 25. So far as W.P. No.23624/2021 is concerned, the petitioner has challenged the action of the respondents by which they called the Chartered Engineer to assess the capacity of the machine. In view of the above discussion, nothing is required to adjudicate the said issue. Even otherwise, Section 145 of the GST Act gives the authority to seek an opinion from an expert, hence this writ petition is devoid of substance hence dismissed. 26. Before parting we would like to observe about the conduct of the competent authorities of the respondents that the machine and two DG sets of the petitioner are under seal since the date of the raid and now more than two years have lapsed still the respondents are not ready to release them. The petitioner is unable to do the production, this has not only caused business loss to the petitioner but to the Central Government also in respect to the revenue. The impugned action of the respondents is wholly without jurisdiction for which the petitioner is liable to be compensated, hence instead of assessing losses caused in this writ petition, we leave it to the pet ..... X X X X Extracts X X X X X X X X Extracts X X X X
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