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S.M. Perfumers Pvt. Ltd. Versus Commissioner of Central Excise, Customs And Service Tax Bangalore-I

2016 (1) TMI 108 - CESTAT BANGALORE

Consequences for Delay in payment of duty in terms of the provisions of Pan Masala Packing Machines (Capacity Determination and Collection of Duty) Rules 2008 - apart from interest, revenue has referred to Proviso-7, which also talks about the assessee having not discharged his duty liability. - The contention of the Revenue is that in terms of the said Proviso, where an assessee does not discharge his duty liability in time, his liability for the subsequent months would be dependent upon the to .....

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he pouches declared by them. The Commissioner has confirmed the demand of duty by adopting Proviso-7 to Rule 9 and by discarding the assessee's contention that incase of delayed payment of duty it is only Proviso-2 which has to be adopted. Apart from the fact that we agree with the learned advocate's contention that Proviso 7 essentially refer to a situation envisaged by Proviso-6 and will have no applicability to a situation which stands separately considered by Proviso 2 to the said Rule, we f .....

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r G Shivadas, Adv For the Respondent : Mr Ajay Saxena, AR ORDER Per Archana Wadhwa All the three appeals are being disposed of by a common order as the issue involved is identical. 2. After hearing, at length both sides represented by Shri G. Shivadas learned advocate for the assessee along with Shri Somesh Arora, learned advocate and Shri Ajay Saxena learned A.R. for the Revenue, we find that the appellant is engaged, inter alia, in the manufacture of pan masala containing tobacco commonly know .....

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ns for payment of duty of excise on the basis of capacity of production in terms of the said rules. Briefly speaking the capacity of production was required to be determined in relation to the number of packing machines installed in a manufacturer's premises and put to use. 3. It is seen that the appellants were declaring the number of packing machines which were to be used for production of the said product in a particular month at the start of the month itself. The duty liability was being .....

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chines not declared in the declarations so filed by the appellants were being sealed by the Revenue and there is no dispute about the said fact. 4. During the period from July 2008 to September 2009, covered in all the three appeals, the appellants were depositing the duty in advance at the start of the month itself, and were reflecting their duty liability in the monthly returns being filed by them. In terms of the said rules, an assessee is required to discharge its duty liability by 5th of a .....

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deposited by them subsequently along with interest leviable thereon for the number of delays which have occurred in a particular month. The said demand of interest by the appellant was in accordance with 2 nd proviso to Rule 9 of the said rules. 6. However, Revenue entertained a view that inasmuch as the appellant has defaulted in payment of duty on account of delayed payments, they are required to discharge their duty liability in terms of Proviso-7 of the said Rule. The said Proviso is to the .....

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mmissioner vide which he confirmed the demand of duty of around ₹ 21 crores along with interest and imposition of equal amount of penalty. Hence the present three appeals of the assessee. 7. We find that the dispute in the present appeals relates to the interpretation of the provisions of Rule 9 of the said Rules and the various provisos specified therein. For better appreciation we reproduce the entire Rule 9 along with the provisos. "9. Manner of payment of duty and interest. - The .....

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he rate specified by the Central Government vide notification under section 11AB of the Act on the outstanding amount, for the period starting with the first day after due date till the date of actual payment of the outstanding amount: Provided also that in case of increase in the number of operating packing machines in the factory during the month on account of addition or installation of packing machines, the differential duty amount, if any, shall be paid by the 5th day of the following month .....

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ferential duty is paid by the 5th day of the following month and in case the amount of duty so recalculated is less than the duty paid for the month, the balance shall be refunded to the manufacturer by the 20th day of the following month : Provided also that if there is revision in the rate of duty, the monthly duty payable shall be recalculated pro-rata on the basis of the total number of days in that month and the number of days remaining in that month counting from the date of such revision .....

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rules or has manufactured goods in contravention of his declaration regarding the plan or details of the part or section of the factory premises intended to be used by him for manufacture of notified goods of different retail sale prices and the number of machines intended to be used by him in each of such part or section, the rate of duty applicable to goods of highest retail sale price so manufactured by him shall be payable in respect of all the packing machines operated by him for the perio .....

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roviso-2 to the said Rule refers to a situation where a manufacturer fails to pay the amount of duty on due date, he shall be liable to pay the outstanding amount along with interest at the rates prescribed by the Central Govt till he pays the amount in question. There is no further reference to any additional liability on the assessee to pay the duty even in respect of the machines which have not been actually put to use by him during that particular month. The said proviso simpliciter makes th .....

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higher than the number of machines used by the assessee for production. It is seen that initially show-cause notice was issued to the appellant proposing confirmation of demand of duty based upon the total number of machines installed in their factory which may not have been put to use for production of the final product at any point of time. The said machines though installed in the appellant's factory, were under seal of the Revenue and were never used. During adjudication, the appellants .....

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belatedly. As the number of machines used by the assessee for the previous month or in some case for the subsequent month were higher than the actual number of machines used by them, he adopted the higher number of machines in terms of the said proviso-7 and accordingly confirmed the duty along with interest and imposition of penalty. 9. The legal issue which emerges out of the said factual position is whether it is only the Proviso- 2 to Rule 9 which has to be adopted in case of failure of an .....

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or confirmation of interest till the payment of the duty by an assessee. The subsequent provisos covers situations which are altogether different and not at all relatable to the disability of an assessee to deposit the amount in time. Proviso-6 which relates to a circumstance and a situation which can, in common parlance, be termed as clandestine activity of a manufacturer. Proviso-7 is admittedly relatable to Proviso-6 and covers an activity of non-payment of duty by an assessee, based upon his .....

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advocate that Proviso-7 is independent of Proviso-2 and it is not related to a situation covered in Proviso-2. Merely because the said two provisions are separated by 5 provisos in between, it cannot be said that the same relates to a different situation. He submits that there is no justification to show that Proviso 6 & 7 have to be read in consonance. For the above purposes, he refers to and relies upon the Board's Circular No. 341/09/2008 TRU dated 27.07.2009. He submits that the sai .....

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nds clarified by the Board that default in payment of duty for one month would not be treated as default for all the remaining part of full financial year and such default would continue till the duty for the said month is paid. In respect of another question, it stands clarified by the Board that the total number of packing machines found available has to be interpreted as to mean packing machines found available for production. Therefore, the machines which have been sealed by the department w .....

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n the factory for the purpose of payment of duty has no reference to such sealed machines as is clear from the above clarifications. He also submits that the said legal issue stands considered by the Tribunal in the case of Sanket Food Products Vs CCE [2015 316 ELT 501 (Tri Mum)]. 12. After considering the submissions made by both sides, we find that there is no dispute about the factual position. There is no allegation of any misdeclaration against the assessee as regards the number of machines .....

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ch stands separately considered by Proviso 2 to the said Rule, we find that the issue stands covered by the majority decision of the Tribunal in the above referred situation. Originally there was difference of opinion between Member (Technical) and Member (Judicial) in the above decision of the Tribunal in the case of Sanket Food Products (supra). Learned Member (Technical) by adopting identical arguments which stand adopted before us by the Revenue held against the assessee. Learned Member (Jud .....

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