Custom, Excise & Service Tax Tribunal
Kaipan Pan Masala Pvt. Ltd vs C.C.E. & S.T. , Bhopal on 14 March, 2016
CUSTOMS, EXCISE & SERVICE TAX APPELLATE TRIBUNAL,
WEST BLOCK NO.2, R.K. PURAM, NEW DELHI-110066
BENCH-SM
COURT IV
Excise Appeal No.E/54971/2014-EX [SM]
[Arising out of Order-in-Appeal No.BPL-EXCUS-000-APP-114-14-15 dated 26.08.2014 passed by the Commissioner (Appeals), Customs, Central Excise, Bhopal]
For approval and signature:
HONBLE MR. S.K. MOHANTY, MEMBER (JUDICIAL)
1
Whether Press Reporters may be allowed to see the Order for publication as per Rule 27 of the CESTAT (Procedure) Rules, 1982?
2
Whether it should be released under Rule 27 of the CESTAT (Procedure) Rules, 1982 for publication in any authoritative report or not?
3
Whether Their Lordships wish to see the fair copy of the Order?
4
Whether Order is to be circulated to the Departmental authorities?
Kaipan Pan Masala Pvt. Ltd. Appellant
Vs.
C.C.E. & S.T. , Bhopal Respondent
Present for the Appellant : Shri.Aditya Kumar, Advocate Present for the Respondent: Smt. Kanu Verma Kumar, D.R. Coram: HONBLE MR. S.K. MOHANTY, MEMBER (JUDICIAL) Date of Hearing : 13.11.2015 Date of Pronouncement: 14.03.2016 FINAL ORDER NO. _52033/2016 PER: S.K. MOHANTY
This appeal is directed against the impugned order dated 26.08.2014 passed by the Commissioner (Appeals), Customs, Central Excise & Service Tax, Bhopal.
2. Brief facts of the case, leading to this appeal are as follows :-
2.1 The appellant is engaged in the manufacture of 'pan masala' containing tobacco, commonly known as 'Gutka', falling under Chapter sub-heading No. 2403.90 of the Central Excise Tariff Act, 1985. The subject goods are notified under Section 3A(1) of the Central Excise Act, 1944 by virtue of Notification No. 29/2008 - C.E. (N.T.) dated 01.07.2008. The goods are subject to assessment under Pan Masala Packing Machines (Capacity Determination and Collection of Duty) Rules, 2008 (in short, the Capacity Determination Rules, 2008), notified under Notification No. 30/2008 - C.E. (N.T.), read with Notification No. 42/2008 - C.E. (N.T.), both dated 01.07.2008.
2.2 In terms of Rule 6 of the Capacity Determination Rules, 2008, the appellant filed the required declaration in the prescribed Form-I for the month of March'2012, declaring that it will be operating 6o nos. of packing machines during the month, of the following MRPs:-
(i) 43 machines - Rs.1.50
(ii) 15 machines - Rs.2.00
(iii) 02 machines Rs.5.00 2.3 Out of the total 60 machines, 8 nos. of machines were purchased by the appellant from M/s Uflex Ltd., Noida, i.e. 3 nos. in November'2011, 4 nos. in February' 2012 and 1 no. in march'2012. Speed of these 8 machines was declared as 200 pouches per minute per machine.
2.4 The Central Excise Department initiated proceedings against the appellant on the ground that the capacity of 8 nos. of new machines purchased by the appellant from M/s Uflex Ltd., Noida, is more than double of production, as specified under Rule 5 of the Capacity Determination Rules, 2008. The show cause notice issued in this regard was adjudicated by the ld. Assistant Commissioner of Central Excise vide order dated 23.12.2013, which is to the following effect:-
(i) Operation of high speed Rotary Machines (speed 200 pouches per minute) purchased from M/s Uflex Ltd. Should be denied and the same are ordered to be removed from the factory premises;
(ii) If the notice desired to operate the machines, they are required to discharge the duty liability twice the Central Excise duties mentioned under Notification No. 42/2008 dated 01.07.2008;
(iii) Penalty of Rs.5,000/- imposed under rule 27 of the Central Excise Rules, 2002.
2.5 Aggrieved by the order of the Asstt. Commissioner of Central Excise, the appellant filed an appeal before the Commissioner (Appeals), Central Excise, Bhopal which was disposed of vide the impugned order dated 26.08.2014, upholding the order of Original Authority, against which the present appeal has been filed by the appellant before this Tribunal.
3. The contention of the appellant in brief, is that as per Rule 4 of the Capacity Determination Rules, 2008, the factors relevant for determination of production of notified goods is the number of packing machines operating in the factory of the manufacturer during the month and that Rule 5 of the said Rules provides for the quantity deemed to be manufactured by use of one operating machine per month. Therefore, payment of duty of excise is dependent upon the number of packing machines operating within the factory and the retail sale prices printed on the pouches. It is further submitted by the appellant that the orders passed by the lower authorities are based on the presumption that the declared speed of the high speed machines purchased by the appellant, each 200 pouches per minute and hence the deemed production would be taken as twice the production, shown in Rule 5 of the 2008 Rules, since under the said Rule the deemed production is fixed taking into account the capacity as 100 pouches per minute. Thus the appellant submits that the findings of the authorities below are contrary to the provisions of Rule 4 & 5 of the Capacity Determination Rules, 2008. To support the above view, the appellant has placed reliance on the C.B.E.C. Circular No.980/04/2014 dated 24.01.2014.
4. Countering the submissions of the appellant, the ld. D.R. appearing for the Revenue reiterated the findings of the Lower Authorities and submitted that the deemed production is to be determined basing on the declared speed of the machines, which is 200 pouches per minute.
5. Heard both sides and have gone through the written submission filed by the appellant during the course of hearing.
6. The short issue to be determined in this appeal is whether the deemed production of Gutkha, in respect of the period March, 2012, is to be determined on the basis of the number of operating packing machines in the factory of the appellant, or on the basis of the speed of the machines declared by the appellant.
7. During the period under dispute, the deemed production of Gutkha was determinable under Rule 4 and 5 of the Capacity Determination Rules, 2008. According to Rule 4 of the said Rules, the relevant factor was the number of machines installed in the factory. Rule 5 of the said Rules fixes the deemed quantity manufactured, by use of one packing machine, with retail sale price printed on the pouch. The above provisions read with the C.B.E.C. Circular dated 24.01.2004 makes the position clear that the relevant factor to be considered for determination of production, is the number of operating machines installed in the factory during the month and the retail sale price printed on the pouches and not on the basis of actual production. It is clear from the above Circular of C.B.E.C. that number of packing machines, operating during the month, is the only relevant factor which forms the basis for determination of deemed production and the duty liability, in terms of Rule 5 of the Capacity Determination Rules, 2008; and not any other factor such as, speed of the machines etc. The impugned orders, adopting the declared speed of the machines as the basis and consequently determination of the deemed quantity of production, are not correct and hence not sustainable under the law.
8. In the result, the impugned order is set aside and the appeal is allowed with consequential relief.
[Pronounced in the Open Court on_14/03/2016] (S.K. MOHANTY) MEMBER (JUDICIAL) Anita 0 6