TMI Blog2018 (7) TMI 1045X X X X Extracts X X X X X X X X Extracts X X X X ..... s) ORDER Per: Anil Choudhary These two appeals have been filed by the revenue against Order-in-Appeal No. 285-286/CE/LKO/2012 dated 25/06/2012 passed by Commissioner of Customs, Central Excise Service Tax, Lucknow, setting aside the Order-in-Original dated 31/10/2011 pertaining to respondent M/s Shyam Traders and further reducing the penalty imposed on other respondent Shri Awadesh Agnihotri, Authorised Signatory from ₹ 5,00,000/- to ₹ 50,000/- under Rule 26 of the Central Excise Rules, 2002. 2. The brief facts of the case are that the respondent M/s Shyam Traders is registered with Central Excise Department and engaged in the manufacture and clearance of Pan Masala and Gutkha under the brand name Shyam Bahar . The respondent-assessee is paying duty under the Pan Masala Packaging Machines (Capacity Determination and Collection of Duty) Rules, 2008 (hereinafter referred to as PMPM Rules, 2008) which came effect from 1st July, 2008 under Section 3A of the Central Excise Act, 1944. Respondent filed the declaration on 28th April, 2010 in the prescribed form-1 effective from 1st May, 2010 to the effect that the respondent had 45 pouch packing machines, ou ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... rther, why not duty of ₹ 37.50 lakhs (being @ ₹ 12.5/- lakhs per machine for the three pouch packing machines) be not demanded and recovered under Rule 9 of the PMPM Rules read with Section 11 A (1) of the Act and further proposal to impose penalty under Rule 17 (1) of PMPM Rules read with Rule 25 of CER, 2002 and further proposing penalty on the respondent Shri Agnihotry Authorised Signatory under Rule 26 of CER, 2002. 5. The SCN was adjudicated on contest and the proposed demand of ₹ 37.50 lakhs was confirmed along with interest and equal amount of penalty under Rule 17 (1) of PMPM Rules read with Rule 25 of CER, 2002. Further, confiscation of the three pouch packing machines was ordered (valued at ₹ 90,000/- per machine) to redeem on payment of fine ₹ 2,50,000/-. Further, penalty of ₹ 5 lakhs was imposed on Shri Agnihotri, Authorised Signatory of Sham Traders . Being aggrieved, the respondents preferred appeals before learned Commissioner (Appeals) on the following grounds: 1. The machines were never installed and thus no violation can be attributed in terms of Rule 8 of PMPM Rules, 2008. This fact can be verified from the photograp ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Rule ibid. But I find that the respondent department failed to establish the violation of proviso 2 to Rule 8 of the Rules ibid., even. I would like to clarify my stance in the succeeding para. Proviso 2 to Rule 8 of PMPM Rules, 2008 clarifies that in case of non working of any installed packing machine during the month, for any reason whatsoever, the same shall be deemed to be the operating packing machine for the month. Here, the all important condition is that the machine should be installed. In my opinion, as per Rule 8, if a packing machine is declared to be installed even for a day in a particular month it is immaterial that the machine is working or non working during the subsequent days in that month and that machine would be counted to be operative for the purpose of Central Excise duty under Rule 7 of the Rules ibid. But, neither in the show cause notice nor in the panchnama, it was alleged/mentioned that three machines under reference were installed. Instead, the panchnama drawn in the presence of two independent witnesses, declares that no manufacturing activity was taking place on these 03 machines though the remaining 42 installed machines were found to be engag ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ow, I intend to analyze the instant case in the light of above interpretation of statute. Vide his report the Range Superintendent submitted that out of 07 uninstalled and sealed machines, 04 packing machines were unsealed and installed and the remaining 03 machines were uninstalled and sealed. This establishes that 03 machines were uninstalled though the seals broken. The respondent department neither challenged the report of Range Superintendent nor made any effort to establish that machines were installed which has already been discussed in the preceding para as no manufacturing activity on these machines was going on (as per panchnama), no irregularity found in stocks of raw materials and final products (as per panchnama) and subject machines confined to isolation (as per photographs). For me this is a very grave error committed by the visiting officials when the entire case was erected mainly for the violation of Rule 7 and Rule 8 of PMPM Rules, 2008, which clearly stipulates that only an installed packing machine would be considered operating for the purpose of payment of Central Excise duty under these Rules. Consequently, on the basis of discussions supra, I hold that the m ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Section 14 of the Act which authorized an officer not below the rank of a Superintendent to record such statement vide MF (DR) notification dated 10.02.1999. The impugned statement to which the adjudicating authority has solely relied on, has no legal sanctity because neither it was a confessional statement not it was recorded before a Superintendent under Section 14 of the Act ibid. In the case of State Vs Yakub Ahmad reported at 2000 (125) ELT 113 (Bom), the Bombay High Court held that the statements which are not recorded by the gazette officer of Customs are not admissible in evidence. Similarly, in the case of DM Dears Pvt. Ltd. Vs CCE, Delhi-II 2002 (141) ELT 514 (Tri-Del), the tribunal held that the statement of a driver not signed by an empowered officer nor disclosing identity of the officer who recorded it of no evidentiary value, and not admissible in evidence- Section 14 of Central Excise Act, 1944. Considering this, one can very well imagine the impasse that could have been created on account of a possible subsequent retraction by the appellant no 2 as the machines under reference had already been sealed and locked in a room by the time the proceedings under panchnama ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ) in the office of the Central Excise, commissionerate Lucknow, filed the copies of the installation, sealing/unsealing report which are relevant. 8. From perusal of report dated 1st May, 2010, jointly signed by the Range Inspector and Superintendent and countersigned by the respondent or the signatory, states that on 1st May, 2010 at 00 .40 hours in compliance to permission granted by Assistant Commissioner of the division, unsealed/installed four Gutkha pouch packing machines of ₹ 1 per pouch. The present position of pouch packing machines in the factory premises as on 1st May, 2010 at 00.40 hours is as under: Total No. of machines available in the factory No. of machines installed/unsealed in the factory. No. of machines uninstalled/sealed in the factory. (1) (2) (3) 45 42 03 9. The learned Counsel for the respondents urges that there is no merit in the appeal of revenue prays for dismissing the appeals. 10. Having considered the rival contentions, we find that at the time of panchnama pr ..... X X X X Extracts X X X X X X X X Extracts X X X X
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