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2015 (8) TMI 34 - CESTAT NEW DELHI

2015 (8) TMI 34 - CESTAT NEW DELHI - 2015 (329) E.L.T. 175 (Tri. - Del.) - Denial of abatement claim - Closure of factory - Applicability of Rule 9 - manufacturers of retail pouches of Gutkha, pan masala and chewing tobacco. - Held that:- Conditions for claiming abatement under Rule 10 of PMPM Rules are satisfied, that the appellant had applied for rebate and that the rebate is admissible. The appellant, however, instead of paying full duty for the Month of March, 2011 by 5th March, 2011 had pai .....

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in in respect of similar provisions regarding levy of duty on compounded basis in respect of iron and steel product, Hon'ble High Court had held that for claiming the abatement for the period of closure of the factory, depositing duty for the whole month is not a pre-condition and that in such cases the duty would be required to be paid only for the number of days for which a factory was working.

However, since the due date for payment of duty was 5th of the month and the appellant p .....

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d in respect of these machines for the whole month i.e. duty payable for July 13 in respect of pan masala pouches manufactured would be - "13 multiplied by the rate applicable to MRP of ₹ 1 + 4 multiplied by the rate applicable to MRP of ₹ 4". The stand of the appellant is that the duty payable in respect of the 4 new machines installed w.e.f. 23.04.2013 would be subject to the provisions of the Fourth Proviso to Rule 9 and accordingly, in respect of these four machines, duty would b .....

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th the balance shall be refunded to him by 20th of the following month. This proviso also states that in case a manufacturer in a particular month commences manufacturing of the goods of a new RSP, his monthly duty liability shall be recalculated pro-rata on the basis of total number of days in that month and the number of days remaining in that month counting from the date of commencement and duty liability for the month shall be discharged unless the differential duty is paid by him by next 5t .....

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d has to be set aside. - However, in respect of March, 2011, the appellant would be liable to pay interest on the net duty payable for this month for the period of delay from the due date as per the provisions of PMPM Rules - Decided partly in favour of assessee. - Excise Appeal No.E/54214/2014-EX[DB], E/54215/2014-EX[DB], E/54216/2014-EX[DB] - FINAL ORDER NOS. 51545-51547/2015 - Dated:- 7-5-2015 - Rakesh Kumar, Member (T) & S K Mohanty, Member (J) For The Appellant:- Mrs Seema Jain, Adv. Fo .....

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reinafter referred to as PMPM Rules) and in respect of chewing tobacco retail pouches under Chewing Tobacco and unmanufactured tobacco packing machines (Capacity Determination and Collection of Duty) Rules 2010 (hereinafter referred to as "CTUTPM Rules"). The dispute in this case is in respect of only two months - March, 2011 and July 2013. 1.2 During March, 2011, the appellant's unit was closed from 01.03.2011 to 16.03.2011. From 17.03.2011 to 31.03.2012 the factory was working. F .....

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sed from 01.03.2011 to 16.03.2011, the duty was paid only on 21.03.2011 and the duty paid was only the proportionate duty for the number of days for which the unit functioned, that is, from 17.03.2011 to 31.03.2011. The department was of the view that the appellant should have first paid the duty for the whole month by the due date i.e. on 05.03.2011 and, thereafter, should have claimed the abatement for the period of closure and that they could not pay the duty directly after deducting the duty .....

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In respect of pan masala pouches, the duty had been paid under PMPM Rules, 2008 and in respect of chewing tobacco, the duty had been paid under CTUTPM Rules, 2010. On 24.07.2013, four new machines were added to the factory, and installed which were to be used for manufacture of pan masala pouches of the MRP of ₹ 4/- per pouch and for this purpose, the necessary declaration had been filed. The point of dispute is in respect of the duty liability for the four new Pan masala packing machines .....

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of a packing machine in a factory during a month, the number of operating packing machines for the month shall be taken as the maximum number of packing machines installed on any day during the month. 1.4 The Department was of the view that in view of the provisions of Rule 8 of the PMPM Rules, the duty liability in respect of the four new packing machines installed w.e.f. 24.07.2013 for packing of the pouches of MRP of ₹ 4 is to be paid for the whole month, and that the provisions of Fou .....

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rwal and Shri Roshan Aggarwal, Directors of the company. Against this order of the Commissioner these appeals have been filed. 2. Heard both the sides. 3. Mrs. Seema Jain, Advocate, the ld. Counsel for the appellant, pleaded that so far as the first point of dispute as to whether in respect of the month of March, 2011, the appellant were required to first pay the duty for the entire month by the due date and then claim the abatement for the period of closure from first March, 2011 to 16th March, .....

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the cases of Shree Flavers Pvt. Ltd. vs. CCE, Delhi-IV reported in 2014 (304) ELT 441 - Kuber Khani P. Ltd. vs. CCE, Rohtak (Final Order No. 54525/2014 dated 20th November, 2014) and Shri Padma Balaji Steel Pvt. Ltd. vs. CCE, Koimbatore reported in 2009 (246) ELT 255 (Tri.Chennai) has held that for claiming the abatement for the period of closure depositing, the payment of duty for the whole month was not a pre-condition and in such cases the duty would be required to be paid only for the number .....

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the earlier declaration in this regard had been filed, that while the 13 machines manufacturing pan masala pouches of MRP of ₹ 1 and 8 machines manufacturing of chewing tobacco pouches of MRP of ₹ 1 had functioned during the entire month, the 4 new machines installed w.e.f 24.07.2013 for manufacture of the Pan masala pouches of MRP of ₹ 4/- had functioned during that month only for 8 days from 24.7.2013 to 31.7.2013, that since these 4 machines had been used for manufacture of .....

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ded to the manufacturer by the 20th day of the following month, that Fourth Proviso to Rule 9 of the PMPM Rules is applicable to the new machines, as these machines were used for packing of the pan masala pouches of a new MRP, that in respect of these machines, there is no justification for demanding duty for the whole month by invoking Rule 8, that the Apex Court in the case of S. Sundaram Pillai & Others vs. R. Pattabiraman & Others reported in AIR 1985 SC 582 has held that the proviso .....

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the main provision and that while construing a provision having a proviso, these have to be read together without making either of them redundant or otiose and that in view of this, Rule 8 of the PMPM Rules cannot be given an interpretation which would make the Fourth Proviso to Rule 9 redundant. She, therefore, pleaded that the impugned order confirming duty demand of ₹ 1,51,35,453/- in respect of the 4 machines installed w.e.f. 24.7.2013 by holding that duty in respect of these machines .....

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month and hence the four machines added w.e.f. 24.07.2013 for the manufacture of Pan masala pouches of MRP of ₹ 4/- would have to be treated as having functioned during the entire month and the duty would be chargeable on that basis. He, therefore, pleaded that there is no infirmity in the impugned order. 5. We have considered the submissions from both the sides and perused the record. 6. As regards the dispute for the month of March, 2011 in respect of which duty demand of ₹ 32,25,8 .....

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iod from 17th March, 2011 to 31st March, 2011 on 21st March, 2011. The Departments' objection is that the appellant should have, first, paid the entire duty for the month of March by the due date, that is, by 5th of the month and only, thereafter, should have claimed the rebate. The duty demand of ₹ 32,25,805/- has been confirmed on this basis which represents the duty for the period from 1st March to 16th March. However, we find that this issue stands settled in favour of the appellan .....

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aid only for the number of days for which a factory was working. We find that same view has been taken by this Tribunal in the case of Shree Flavers Pvt. Ltd. vs. CCE, Delhi-IV reported in 2014 (304) ELT 441 - Kuber Khani P. Ltd. vs. CCE, Rohtak (Final Order No. 54525/2014 dated 20th November, 2014) Shri Padma Balaji Steel Pvt. Ltd. vs. CCE, Koimbatore reported in 2009 (246) ELT 255 (Tri.Chennai) and also in the appellant's own case for the previous period decided by this Tribunals final ord .....

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een confirmed. During this period, the appellant in terms of Declaration made in Form - A for July, 2013 had declared that they would be operating 21 packing machines - 13 for the manufacture of Pan masala pouches of MRP of ₹ 1 and 8 machines for manufacture of chewing tobacco pouches of MRP of ₹ 1. W.e.f. 24.07.2013, the appellant installed four new machines for making of Pan masala pouches of MRP of ₹ 4, and in this regard, necessary declaration had been filed. With the insta .....

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to various retail sale price (RSP) slabs, and the rate prescribed for various RSP slabs are per month per machines. The various slabs for which the rate of duty payable on prescribed in the Notification No.42/2008-CE dated 01.07.2008 are "upto ₹ 1", "exceeding ₹ 1 but not exceeding ₹ 1.5, "exceeding ₹ 1.5 but not exceeding ₹ 2", "exceeding ₹ 2 but not exceeding ₹ 3", "exceeding ₹ 3 but not exceeding ₹ 4 .....

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machines installed on any day during the month. Thus, if during a month 10, 15 and 21 machines have been operated on various days, the number of operating packing machines for the purpose of Rule 7 would be 21. If all the machines have been used for manufacture of the Pan masala gutkha pouches of only one RSP, there would be only one rate of duty and the duty payable would be the applicable rate per machine per month multiplied by the maximum number of machines operated during the month or any d .....

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+P3 N3 + P4 N4. 8. Rule 9 of the PMPM Rules titled "manner of payment of duty and interest" provides that "the monthly duty payable on notified goods shall be paid by 5th of the same month and an intimation in Form - 2 shall be filed with the Jurisdictional Superintendent of Central Excise before the 10th day of the same month. First proviso prescribes that for the month of July, 2008 the duty shall be paid by 15th day of July 2008. Second Proviso to Rule 9 provides that in case t .....

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f any, shall be paid by the 5th of the following month. However, the Fourth Proviso, which is reproduced below is about the manner of calculation of duty in case a manufacturer permanently discontinues the manufacture of the goods of existing retail sale price (RSP) or commences the manufacture of goods of a new RSP during the month. "Provided also that in case a manufacturer permanently dis-continues manufacturing of goods of existing retail price or commences manufacturing of the goods of .....

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ded to the manufacturer by the 20th of the following month." 8.1 Thus, the fourth proviso is not about the manner of payment of duty but is about calculation of duty in case, during a month, the manufacture of same existing RSP has been permanently discontinued or manufacture of retail pouches of a new RSP has been started and the effect of this proviso is that of qualifies the method of calculation of duty prescribed under Rule 7. 8.2 In the present case, the appellant had commenced manufa .....

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rate applicable to MRP of ₹ 4". The stand of the appellant is that the duty payable in respect of the 4 new machines installed w.e.f. 23.04.2013 would be subject to the provisions of the Fourth Proviso to Rule 9 and accordingly, in respect of these four machines, duty would be chargeable only for the 8 days from 24.07.2013 to 31.07.2013. 9. Thus, point of dispute is as to whether the Fourth Proviso to Rule 9 would be applicable to Rule 7 read with Rule 8. As discussed above, it is Ru .....

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the month. The Fourth Proviso to Rule 9 is about recalculation of duty in the circumstances when during a month the manufacturer either permanently discontinues the manufacture of the goods of an existing RSP or commences the manufacture of goods of a new RSP. Thus the Fourth Proviso to Rule 9 is in respect of calculation of duty payable for a month and has to be treated as qualifying the provisions of Rule 7 read with Rule 8. Hon'ble Bombay High Court in the case of Shree Satpuda Tapi Pari .....

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ing part should be generally given such a construction which would make the exceptions carved out by the proviso necessary and the construction which would make construction unnecessary and redundant should be avoided." 9.1 If the Department's contention is accepted, it would make the Fourth Proviso to Rule 9 redundant, which in view of the above mentioned judgment of Hon'ble Bombay High Court is not permissible. The Fourth proviso to Rule 9 clearly states that in case a manufacture .....

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