Custom, Excise & Service Tax Tribunal
M/S Trimurti Fragrances (P) Ltd vs Cce, Kanpur on 7 June, 2016
CUSTOMS, EXCISE & SERVICE TAX APPELLATE TRIBUNAL,
REGIONAL BENCH: ALLAHABAD
DIVISION BENCH
Appeal No. E/50211/2015 (DB)
Dated of Hearing/decision: 07/6/2016
[Arising out of Order-in-Appeal No. KNP-EXCUS-000-COM-011-14-15 dated 29.09.2014 passed by Commissioner of Central Excise & Service Tax, Kanpur, (U.P.)]
For approval and signature:
Honble Shri Anil Choudhary, Judicial Member
Honble Shri Anil G. Shakkarwar, Member (Technical)
1.
Whether Press Reporter may be allowed to see the Order for publication as per Rule 27 of the CESTAT (Procedure) Rules, 1982?
No
2.
Whether it would be released under Rule 27 of the CESTAT (Procedure) Rules, 1982 for publication in any authoritative report or not?
Yes
3.
Whether their Lordships wish to see the fair copy of the order?
Seen
4.
Whether order is to be circulated to the Department Authorities?
Yes
M/s Trimurti Fragrances (P) Ltd. Appellant
Vs.
CCE, Kanpur Respondent
Appearance:
Present for the Appellant: Shri Nishant Mishara, Advocate Present for the Respondent: Shri V.R. Reddy (Assistant Commissioner) A.R. Coram: Honble Shri Anil Choudhary, Member (Judicial) Honble Shri Anil G. Shakkarwar, Member (Technical) Final Order No.70314/2016 Per: Anil Choudhary The issue in this appeal is under the facts and circumstance for the month of November 2012 the Pan Masala manufacturing Unit of the appellant was lying closed since 06.10.2012 till November 18 and was in operation from November 19 to November 30, whether the appellant is required to pay the pro-rata duty for12 working days or is liable to pay the duty for the whole month and there after seek rebate for non working days under the proviso to Rule 9 of Pan Masala Packing Machine (Capacity determination and collection of duty) Rules 2008.
2. The brief facts are:- that the appellant is registered dealer and paying duty on manufacturer of Gutkha under Section 3A of the Act read with the Pan Masala Packing Machines (Capacity Determination and Collection of Duty) Rules 2008, hereinafter referred to Pan Masala Packing Machines Rules 2008 (for short).
3. The appellant vide letter dated 13.9.2012 intimated the Department that it intended to start commercial production w.e.f. 15.9.2012 and requested for unsealing of 11 machines, to manufacture Gutkha as follows:-
7 machines for manufacture of Gutkha of MRP Rs. 2.00
4 machines for manufacture of Gutkha of MRP Rs. 1.50
4. The appellant vide letter dated 25.9.2012 intimated the department that it will stop production/clearance w.e.f. 06.10.2012 and requested for sealing of the machines.
5. The Appellant paid Central Excise duty of Rs. 368 Lacs for the month of October 2012 for 11 machines on 5.10.2012.
S.No. Retail sale price/pouch Rate of duty per packing machine per month (Rs. In lakhs) for Pan Masala Containing tobacco No of machines Duty (Rs. In lakhs) for the entire month
1. Rs.1.01 to Rs.1.50 29 4 116
2. Rs.1.51 to Rs.2.00 36 7 252 Total 368
6. As the production was closed for 26 days in the month of October, the Appellant applied for abatement for 26 days. Abatement of Rs. 3,08,64,516/- was granted by the Assistant Commissioner vide Order No. 53/Abatement/CX/ACK-III/11 dated 29.11.2012, who allowed the said amount to be adjusted while discharging duty for the subsequent month/period.
7. The factory of the Appellant remained closed at the start of November 2012 (since 6.10.12). The Appellant vide letter dated 12.11.2012 informed the Assistant Commissioner that they intended to start production of Gutkha of MRP Rs. 1.00 with the aid of 6 pouch packing machines. Gutkha of MRP Rs. 2.00 with the aid of 5 pouch packing machines from 19.11.2012
8. The Assistant Commissioner vide letter dated 16.11.2013 directed Superintendent Central Excise to unseal and install the 11 machines in the midnight of 18.11.2012.
9. The appellant from 19.11.2012 started the manufacture of pouches of MRP Rs. 1.00 and of MRP Rs. 2.00
10. For the month of November, the Appellant calculated that it was liable to pay Central Excise duty of Rs. 1,17,60,000/- on pro rata basis for 12 days (19.11.2012 to30.11.2012). The Appellant therefore adjusted Rs.1,17,60,000/- from the Abatement of Rs. 3,08,64,516/- sanctioned to it earlier vide Order 29.11.2012 by the Assistant Commissioner. After adjustment amount of Rs.1,91,04,516/- remained from the abated amount. The Appellant informed the Department of the payment by way of adjustment and submitted Form-2 on 06.12.2012.
11. On perusal of ER-I Return filed by the Appellant for the month of November, 2012, the Department observed that the Appellant had paid duty as under:-
S.No. Retail sale price/pouch Rate of duty per packing machine per month (Rs. In lakhs) for Pan Masala Containing tobacco No of machines Duty leviable for the entire month (in lac) No of days the factory was operating Duty adjusted by Appellant on pro rata basis
1.
Upto Rs. 1.01 19 6 114 12 45,60,000
2. Rs.1.51 to Rs. 2.00 36 5 180 12 72,00,000 Total 11760000
12. The department was of the opinion that as far as pouch packing machines packing Gutkha of MRP Rs. 1 is concerned, since the Appellant has started manufacturing Gutkha on a new MRP in the middle of the month (earlier MRP Rs. 1.50 was manufactured), it was liable to pay duty on a pro rata basis by the 5th of the succeeding month which was correctly paid by the appellant, but in respect of pouch packing machines manufacturing Guthka of MRP Rs. 2.00, the Appellant was manufacturing Gutkha of the same MRP and was liable to pay duty of Rs. 180 lakhs for the entire month, instead of Rs. 72 lakhs paid by the appellant on pro rata basis. The Supdt. Central Excise vide letter dated 04.03.2013 and 12.3.2013 requested the Appellant to deposit differential Central Excise duty of Rs. 1,08,00,00/- with interest.
13. The appellant replied that it was not liable to pay duty for the entire month. Thereafter a Show Cause Notice dated 25.9.2013 was issued to the Appellant asking it to Show Cause why -
a) The Central Excise duty short paid amounting to Rs.1,08,00,000/- (Rupees one crore eight lakhs only) should not be demanded and recovered from them under Section 11A of the Central Excise Act 1944 read with Rule 9 of the Pan Masala Packing Machines (Capacity Determination and Collection of Duty) Rules 2008 and Notification No. 42/2008 CE dated 1.7.2008 as amended in respect of production/clearance effected by them for Gutkha during the month of November 2012
b) The interest leviable thereon should not be demanded from them under Section 11AA of the Central Excise Act read with Rule 9 of the Pan Masala Packing Machines (Capacity Determination and Collection of Duty) Rules 2008
c) Penalty should not be imposed upon them under Rule 17 (1) of the Pan Masala Packing Machines Rules 2008 read with Section 11AC of the Central Excise Act 1944 for contravening the provisions of Rule 7 and 9 of the Pan masala Packing Machines (Capacity Determination and Collection of Duty) Rules 2008
d) Penalty should not be imposed upon them under Rule 27 of the Central Excise Rules 2002 for contravening the provisions of Rule 12 of the Central Excise Rules 2002 read with Rule 9 of the Pan Masala Packing Machines (Capacity Determination and Collection of Duty) Rules 2008
14. The show cause notice was adjudicated by the Commissioner vide Order-in-Original dated 29/9/2014 conforming the proposed duty along with interest and equal amount of penalty under Rule 17 of Pan Masala P.M. Rules read with section 11 AC of the Act. Further penalty of Rs. 5,000/- was imposed under Rule 27 CER, 2002 for contravening Rule 12 a CER 2002 read with Rule 7 and 9 of Pan Masala P.M. Rules 2008.
15. The ld. Counsel further urges that from a plain reading of the 4th proviso to Rule 9 with Rule 7 it is evident that in the facts of the appellant they were required to pay the duty pro-rata on the basis of the total numbers of days in that month they have operated the Packing Machines. Being aggrieved the appellant is before the Tribunal and urges the Ld. Commissioner have totally misconceived the provision for Pan Masala P.M. Rules, 2008. Under the provision Rules 9 read with Rule 7 of Pan Masala P.M. Rule, 2008 provides that the duty of particular month has to be calculated, to the rate with the number of operating Pan Masala P.M. in the factory during the month. There is no dispute out of 11 Packing Machines, 6 of the Packing Machine had been used for packing of Pouches with MRP Rs.1 and 5 Machine were operated for packing of pouches with MRP of Rs. 2. Further Rule 9 states that the per month duty shall be payable by 5th of same month under intimation to Revenue by the 10th day. The 2nd Proviso provides that if the manufacturer fails to pay the amount of duty by due date he shall be liable to pay amount standing along with interest. The 4th proviso to Rule 9 reads as follow:-
Provided also that in case a manufacturer permanently discontinues manufacturing of goods of existing retail sale price or (commences manufacturing of goods of a new retail sale price during the month), the monthly duty payable shall be recalculated (pro-rate 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 discontinuation) or commencement and the duty liability for the month shall not be discharged unless the differential 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. 15.1 It is further urged that the demand is bad, and is hit by Revenue Neutrality. As under the admitted facts on payment of duty demanded, the appellant will be entitled to rebate of equal amount.
15.2 It is further urged that there is not illegality in taking abetment suo-moto, under the admitted facts (no. of working days) and under the proviso to Section 3A of the Act, which reads as follows Provided that where a factory producing notified goods did not produce the notified goods during any continuous period of 15 days or more, the 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. 15.3 Further Rule 10 of P.M. P.M. Rules provides for abatement without prescribing that order of abatement will be passed by the Revenue, as both sealing and unsealing of Packing Machine is done by the department.
15.4 Further urges that the issue is not longer res-integra. In Shri Flavours Pvt. Ltd Vs. CCE Delhi-IV reported in 2014 (304) E.L.T. 441, (Tri.), this Tribunal allowed the appeal of assessee and held that where a manufacture unit is aware of the period of closure of its unit, before the duty is deposited by them for the entire month, they may seek abatement and make deposit of duty for actual working days only.
16. Heard Ld. A.R. for revenue, who relied on the impugned order.
17. Having considered the rival contentions we find that the issue herein is covered in favour of appellant in the earlier order of the Tribunal in Shri Flavours (supra) on all fours. Further Honble Delhi High Court have held in CCE Vs. Shakti Fragrances Pvt. Ltd. reported in 2015 (324) E.L.T. 390 have held as follows In the present case, the appellant had pressed into service Rule 10 of the PMPM Rules requires the duty calculated on a proportional basis to be abated in case the factory does not produce the notified goods during any continuous period of 15 days in a month. Rule 10 further requires the intimation to that effect to be given to the authorities at least three working days prior to the commencement of the period of closure. Rule 9 requires the monthly duty payable to the authorities to be paid by the fifth day of the same month. There is nothing in Rule 9 to suggest that the failure to pay the duty payable on all the machines upfront by the 5th day of a month would disentitle the assessee to claim pro-rata abatement of duty. The requirement under Rule 10 of giving intimation three days prior to the closure has been complied with by the assessee.
On a collective reading of Rules 9 and 10 of the PMPM Rules, the Court is of the view that the failure to make the payment of duty on fifth day of every month cannot result in depriving the assessee of the pro-rata abatement of duty which he is in any way entitled to since admittedly in the present case there has been a closure of the factory from 14th to liable to pay the interest for the period of late deposit of duty.
18. Accordingly we hold that the impugned order is bad and against the provisions of Section 3A of the Act read with Rules 7,8,9, & 10 of Pan Masala P.M. Rules, 2008. The appeal is allowed and impugned order is set aside. Appellant is entitled to consequential benefits.
(Dictated and pronounced in the open Court)
(ANIL G. SHAKKARWAR) (ANIL CHOUDHARY)
MEMBER (TECHNICAL) MEMBER (JUDICIAL)
(K. Gupta)
1
Appeal No. E/50211/2015 (DB)