9911796707
TMI Blog2022 (12) TMI 1141X X X X Extracts X X X X X X X X Extracts X X X X ..... made by the assessee. It appears during the course of the investigation that Appellant have submitted intimation/permission letters and filed declaration in Form-1 on 09.04.2009/16.04.2009 with the Deputy Commissioner, Division -II, Silvassa and endorsed copies of the same to the Range office, in terms of Rule 6 (6) of the Pan Masala Packing Machines (Capacity Determination and Collection of Duty), Rules, 2008; for addition of some new packing machines during the period of April -2009, June -2009 and July -2009 respectively, for manufacture of the aforesaid products. Accordingly, new packing machines were installed in the production area of the appellant as permitted by the Jurisdictional Deputy Commissioner vide his office letter dated 15.04.2009, 15.06.2009 and 16.07.2009 respectively. Further, it was observed that during the said investigation the Appellant had paid Central Excise Duty amount of Rs. 87,50,000/- and Rs. 10,87,500/- in respect of new packing machines added during the months of April 2009 and June 2009 respectively, on pro-rata basis from their date of installation. The Appellant also paid differential Central Excise Duty amount of Rs. 3,25,000/- in respect of two ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... under proviso to Section 11A(10) of Central Excise Act, 1944,as made applicable vide Rule 18 of the Pan Masala Packing Machines (Capacity Determination and Collection of Duty) Rules, 2008 along with interest thereon under Section 11AB of Central Excise Act, 1944; (c) imposed penalty of Rs. 3,20,00,000/- on the appellant under Rule 25 of Central Excise Rules,2002 read with Rule 17 of the PMPM Rules 2008 2.2 Against the above order of the Commissioner, the present appeal has been filed. 3. Shri N.K. Tiwari, learned Consultant appearing for the appellant submits that impugned order passed 12 years after issuance of show cause notice. As the impugned order was not passed within a reasonable time, the impugned order ought to be set aside on this ground alone. He placed reliance on following decisions:- * State of Punjab Vs. Bhatinda Distt Co-Op Milk - 2007(217) ELT 325 (SC) * Serve Pharmaceuticals Vs. UOI -2019(366) ELT 49 (Guj.) * Siddhi Vinayak Syntex Pvt. Ltd. Vs. UOI - 2017(352)ELT 455 (Guj) * Sunrise Remedies Vs. UOI -2019(366) ELT 49 (Guj) 3.1 He also submits that the annual capacity of production is determined by the Deputy Commissioner under Rule 6(3) of the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... f packing machines. At the time of replacement, the total number of installed machines did not increase. The 2nd proviso to Rule 8 is a deeming provision whereby if the installed machines become non working/ is removed for any reason, the manufacturer will be liable to pay the duty for the whole month as duty is payable on the maximum number of machines installed on any day during the month. In that scenario the manufacturer cannot plead that since the machine was not working he is not liable to pay duty. The case of the appellant is not non working of an installed machine. Duty is payable on the maximum number machines installed on any day or at any time in the month does not increase. The number of installed machines in the month did not exceed the number on which duty was paid by the Appellant. The show cause notice as well as the impugned order states that there is no provisions for replacement of the machines in the PMPM Rules. However, there was no need for a provision for replacement of the machines as Rule 6 of the PMPM Rules covers the issue of replacement also. The demand is unsustainable and ought to be set aside. 3.4 He also submits that demand of Rs. 98,37,500/- on ad ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... machine per month as specified in Rule 5. When for the purpose of Rule 5, in case of one packing machine manufacturing Gutkha or Pan Masala pouches of RSP of Re. 1, the annual capacity of production cannot be double the deemed capacity. He placed reliance on the decisions of Durga Trading Com -2011 (273) ELT 474. 4. Shri Ghanasyam Soni, Learned Joint Commissioner (AR) defended the impugned order by reiterated the Commissioner's findings. 5. We have carefully considered the submissions from both the sides and perused the records. As regard the demand of Rs. 1,20,12,500/- we find that the case of the department is that provisions of Rule 8 nowhere provide the pro-rata payment of duty on the basis of date of installation of new Machines. As per department Appellant was required to pay duty for the whole month. The Learned Commissioner in impugned order also held that the Appellant was not entitled for the abetment of duty in case of non-production of the notified goods as provided in Rule 10. It should be appropriate at this juncture to re-visit the legal provisions. Section 3A of the Central Excise Act, 1944 reads as follows :- SECTION 3A : Power of Central Government to charge E ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... goods did not produce the notified goods during any continuous period of fifteen days or more, duty calculated on a proportionate basis shall be abated in respect of such period if the manufacturer of such goods fulfils such conditions as may be prescribed. (4) The provision of this section shall not apply to goods produced or manufactured, by a hundred per cent export - oriented undertaking and brought to any other place in India. Explanation 1 :- For the removal of doubts, it is hereby clarified that for the purposes of section 3 of the Customs Tariff Act, 1975 (51 of 1975), the duty of Excise leviable on the notified goods shall be deemed to be the duty of Excise leviable on such goods under the First Schedule and the Second Schedule to the Central Excise Tariff Act, 1985 (5 of 1986) read with any notification for the time being in force. Explanation 2 :- For the purposes of this section the expressions "hundred per cent export-oriented undertaking" shall have the meanings assigned to it in section 3." 5.1 In pursuance to the aforesaid section, the Pan Masala Packing Machines (Capacity Determination and Collection of Duty) Rules, 2008 has been framed vide Notification No. ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... tuations, the rules provided for deeming the number of packing machines operating. For e.g., Rule8 says that in case of addition or installation or removal of packing machines in the factory during a month, the number of operating packing machines for the month shall be taken as the highest number of packing machines installed on any day during the month. 5.3 Rule 6 provides for declaration to be filed by the manufacturer stating details in Form 1, as below:- (i) Number of single track packing machines available in the factory. (ii) Number of packing machines out of (i), which are installed in his factory. (iii) Number of packing machines out of (i), which he intends to operate in his factory for production of notified goods. (iv) Number of multiple track or multiple line packing machine, which besides packing the notified goods in pouches, perform additional processes involving moulding and giving a definite shape to such pouches. (a) Number of multiple track or multiple line packing machine, which are incapable of performing additional processes specified in (iv). (v) Number of multiple track of multiple line packing machines out of (iv) and (iv)(a), which are instal ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e such packing machine out of the factory premises, it shall be uninstalled and sealed by the Superintendent in such a manner that it cannot be operated. 5.8 Rule 6(6) provides that in case a manufacturer wishes to make any subsequent changes with respect to any of the parameters which has been declared by him and approved by the authority in terms of sub-rule (2) such as changes relating to addition or removal of packing machines in the factory or making alterations in any part or section of the approved premises or in the number of machines to be used in such part or section commencing manufacture of goods of a new retail sale price or discontinuation of manufacturing of goods of existing retail sale price (RSP) etc., he shall file a fresh declaration to this effect at least 3 working days in advance to the authority, who shall approve such fresh declaration and re-determine the annual capacity of production following the procedure specified in sub-rule (2) 5.9 Thus, it is noticed that a detailed and exhaustive procedure has been provided for determination of the annual capacity as well as the procedure for any change in the number of machines or retail sale price etc., resulti ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e is also clear from the following correspondences. There is no misdeclaration found by Revenue on the part of appellant regarding number of machines used for manufacture of notified goods. In such circumstance demands of duty over and above the duty determined by the Jurisdictional officer legally not correct. (i) Appellant vide letter dated 09.04.2009 informed the jurisdictional Deputy Commissioner that they wished to add 14 No. of pouch packing machine for production Gutkha w.e.f. 16.04.2009. (ii) Appellant also filed a declaration in Form-I as required under Rule 6 of the PMPM Rules 2008. (iii) Vide Panchnama dated 16.04.2009, the 14 Pouch packing machines were installed in Appellant's premises. (iv) an Order F.No. V/16-10/CTC/08-09/Pt II/228 dated 15.04.2009 was passed by the Deputy Commissioner fixing the Annual Capacity of production for the 14 additional machines in the factory w.e.f. 16.04.2009 at 6,28,99,2000 Pouches per annum and assessing the duty liability for 15 days w.e.f. 16.04.2009 to 30.04.2009 at Rs. 87,50,000/ (v) Accordingly the Appellant paid the duty assessed by the Deputy Commissioner. (vi) Similarly, Appellant vide letter dated 09.07.2009 inform ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... manufacturer has not filed the declaration under Rule 6 and has not made further declaration under Rule 6(6) in case of change in parameters already declared under Rule 6(1) and secondly where in case of addition or installation of machines, the manufacturer has not filed any intimation to the Deputy/Assistant Commissioner in writing as per the mandate of Rule13. In this case all the required procedure was followed by the Appellant and the same is not under dispute, therefore, the application of Rule 8 does not arise and no duty demand is sustainable in this matter. 6.1 We also find that Rule 10 of the PMPM rules speaks about the abatement in case of non-production of goods. That the said Rule states that when the factory did not produce the notified goods during any continuous period of fifteen days or more, the duty calculated on a proportionate basis shall be abated in respect of such period provided the manufacturer follows the procedure laid down therein. In the instant case, the authority below has denied the abatement stating that conditions are not satisfied. It is not disputed that the appellant paid duty as per the annual capacity of production determined by the Jurisdic ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... riod w.e.f. 10.09.2008 onwards. The same shall be deemed to be operative for the whole months of September 2008, therefore, the duty liability on these packing machines remains unchanged even after removal of the said packing machines. Similarly, the assessee have added 4 packing machines in February 2009 , 10 Packing machines in May 2009 and 13 Packing machines in June 2009 against the replacement. Hence the, assessee is required to pay the Central Excise Duty on said replaced machine for the whole months as contended by the department. However, we find that demand of duty on this ground is legally not correct. It is admitted facts that appellant requested the Jurisdictional Officers for permission to replace the machines in three months , September 2008, February 2009 and March 2009. The replacement of machines was carried out under the supervisions of the Central Excise officers. In this regard Rule 6(5) provides that the machine(s) which the manufacturer does not intend to operate shall be uninstalled and sealed by the Superintendent of Central Excise and removed from the factory premises under his physical supervision, provided that where such packing machines is not feasible ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... abilities/production capacity are determined by the jurisdictional Assistant Commissioner/ Deputy Commissioner under the provisions of PMPM Rules the said duty liability /production capacity becomes final and cannot be reviewed without challenging the said assessment order. There is no doubt that the said orders were appealable but the revenue had not filed any appeal challenging the said orders. Thereafter, the Revenue has issued show cause notice demanding duty without challenging the correctness of the said orders fixing the annual capacity of the production of Appellant. Clearly, in the present matter the said orders are not questioned by the revenue and after issuance the show cause notice the impugned matter is reopened in a proceeding which is legally not correct. The Revenue having any issue on the capacity of production and duty determination would need to approach the appellate authority instead of reopening the impugned matter by issuing the show cause notice. We find that Tribunal in the matter of M/s Forbos Industries (Supra) and Sulekhram Steel Ltd. (Supra) held that order fixing production capacity based duty is appealable order. In these circumstances also, we find ..... X X X X Extracts X X X X X X X X Extracts X X X X
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