Custom, Excise & Service Tax Tribunal
Pan Parag India Ltd vs Commissioner Of Central Excise ... on 20 April, 2016
CUSTOMS, EXCISE & SERVICE TAX APPELLATE TRIBUNAL SOUTH ZONAL BENCH BANGALORE Appeal(s) Involved: E/22345/2014-DB [Arising out of Order-in-Appeal No. BLR-EXCUS-003-COM-19-13-14 dated 09/04/2014 passed by Commissioner of Central Excise, Bangalore] For approval and signature: HON'BLE SHRI M.V.RAVINDRAN, JUDICIAL MEMBER HON'BLE SHRI ASHOK K. ARYA, TECHNICAL MEMBER 1 Whether Press Reporters may be allowed to see the Order for publication as per Rule 27 of the CESTAT (Procedure) Rules, 1982? No 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? Seen 4 Whether Order is to be circulated to the Departmental authorities? Yes PAN PARAG INDIA LTD, Survey No. 120/4, Alur Village & Post Dasanapura Hobli, Bangalore North Appellant(s) Versus Commissioner of Central Excise BANGALORE- III KARNATAKA Respondent(s)
Appearance:
Shri Janaki Raman, Adv For the Appellant Shri Pakshi Rajan, A.R. For the Respondent Date of Hearing: 19/01/2016 Date of Decision:
CORAM:
HON'BLE SHRI M.V.RAVINDRAN, JUDICIAL MEMBER HON'BLE SHRI ASHOK K. ARYA, TECHNICAL MEMBER Final Order No. / 2016 Per : Ashok K Arya Both the sides have been heard in detail.
2. The appellants namely M/s Pan Parag India Ltd., (hereinafter also referred to as PPIL) are the manufacturers of gutkha falling under Chapter Heading 24039990 of the First Schedule to the Central Excise Tariff Act 1985. The appellants started the manufacturing activity from 01.12.2008. Earlier to this, their predecessors namely M/s Jalaram Industries were having this gutkha manufacturing activity in the same premises, who surrendered their registration on 17.11.2008.
2.1 The appellants undertook to discharge any central excise duties/service tax liabilities that may arise in respect of assessment of the notified goods to central excise duties when the goods were manufactured and sold by their predecessors namely M/s Jalaram Industries vide their letter dated 26.11.2008. In consequence, the appellant were issued show-cause notice dated 06.07.2009 for recovery of Rs 78,75,000/- and interest thereon and for imposition of penalty.
2.2 Commissioner, Bangalore-I Commissionerate, by his order dated 09.04.2014 (date of impugned order) confirmed the demand of duty of Rs. 78,75,000/- alongwith interest and also imposed equivalent penalty of Rs 78,75,000/-. The appellants are in appeal before this Tribunal for setting aside the order passed by the Commissioner of Central Excise Bangalore II Commissionerate. The learned advocate Shri S. Janaki Raman appearing for the appellant inter alia mainly submitted as follows:
i. When there was no production in the unit during 01.07.2008 to 16.07.2008 and when they paid duty for the production between 17.7.2008 to 31.07.2008 no interest liability can be imposed on them.
ii. In any case when the unit was closed on account of various factors which were beyond the control of the Appellants as has been explicitly mentioned and forming part of the records, payment of duty on or before 5th July 2008 for the month of July 2OO8 does not arise as only at much later point of time, it was decided to seek desealing of machine(s) and for the remaining days of the month duty stood discharged on 17.07.2008 covering the period of 17.07.2008 to 31.07.2008.
iii. The Appellants stand in this regard is vindicated by the decision of the Hon'ble CESTAT, Principal Bench, New Delhi in the case of Trimurthi Fragrance (P) Ltd., and others V/s Commissioner of Central Excise, New Delhi [2O15-TIOL-1111 CESTAT-DELHI].
iv. As in the case of Appellants, commencement of production became certain on desealing of machine(s) effected on 17.07.2008, duty was paid on that day itself.
v. In as much as our entitlement to claim abatement of duty covering the period of cessation of work on sealing of machines, there is no question of demand of duty by denying abatement, insisting payment on or before 5th July and imposition of penalty. As regards interest", it is our contention that the ratio of above decision is applicable and nothing could be envisaged on 5th July 2008 for determination of duty and due date cannot be reckoned as 5th July 2008 in the facts and circumstances of the case. In any case, duty due in terms of PMPM Rules, 2008 stood correctly determined in terms of the said Rules and tendered on 17.07.2008 itself covering the period of 17.07.2008 to 31.03.2008, which is at the time of start of production on 17.07.2008. Any other interpretation would not be in consonance with principles underlying abatement". Hence, the Appellants are not liable for payment of interest for the period of 06.07.2008 to 16.07.2008, which is more so on account of Appellants being the successor of M/ s Jalaram Industries, who were existing at that point of time, and paid the duty on 17.07.2008.
vi) The appellants are not liable for payment of interest for the period of 6.7.2008 to 16.7.2008; which is more so on account of the appellant being successor of M/s Jalaram Industries Ltd.
3. The learned A.R. appearing for the Revenue has reiterated the findings given by Commissioner in his order-in-original dated 09.04.2004 against which the appellants are before the Tribunal. Learned A.R. inter alia states that the impugned order has rightly confirmed the interest and imposed penalty on the appellants.
4. The facts of the case on record and the submissions of the appellants as well as the respondent namely Commissioner of Central Excise, Bangalore have been carefully considered. The appellants are manufacturing gutkha falling under CETA 2403990. The period of dispute is July 2008.
4.1 It is pointed out that appellants took over the present manufacture unit from M/s Jalaram Industries, Bangalore, who surrendered their registration certificate No. ACSPN1108NXM001 and intimated the Department about their stopping of production work at the closing hours on 15.11.2008 vide their letter dated 17.11.2008.
4.2 The appellants namely M/s Pan Parag India Ltd., Bangalore registered themselves with Central Excise Registration No. AAECP3930FXM004 dated 21.11.2008 for the same factory premises and took over all the packing machines, raw material from their predecessor M/s Jalaram Industries Ltd on 24.11.2008. The appellants had also given undertaking to discharge any central excise/service tax liabilities in case of the goods that were manufactured and sold by M/s Jalaram Industries, their predecessor, vide their letter dated 26.11.2008 and consequently the present proceedings were started against the appellants vide show-cause Notice No. C.No. V/24/15/31/09 Adjn B.III dated 06.07.2009 whereunder they were asked to give their reply/submissions as below:
a. As to why duty of Rs 78,75,000/- short paid be not demanded from the noticee appellant under Section 11A of Central Excise Act 1994 read with Rule 9 of Pan Masala Packing Machines (Capacity Determination and Collection of Duty) Rules 2008.
b. As to why Interest on duty amount of Rs 78,75,000/- short paid during July 2008 be not demanded and recovered under Section 11AB of Central Excise Act 1944 read with Rule 9 of Pan Masala Packing Machines (Capacity Determination and Collection of Duty) Rules 2008.
c. As to why interest for delay in payment of duty of Rs 78,75,000/- for July 2008 (for two days) be not demanded and recovered from them under the provisions of Rule 9 of the Pan Masala Packing Machines (Capacity Determination and Collection of Duty) Rules 2008.
d. As to why penalty should not be imposed on them under the provisions of Rule 17 of the Pan Masala Packing Machines (Capacity Determination and Collection of Duty) Rules 2008.
5. The impugned order confirmed the following:
a. Demand of duty of Rs 78,75,000/- for July 2008 under Section 11A of the Central Excise Act 19494 read with Rule 9 of Pan Masala Packing Machines (Capacity Determination and Collection of Duty) Rules 2008.
b. Demand of interest on duty confirmed at (a) above under Section 11AB of the Central Excise Act 1944 read with Rule 9 of Pan Masala Packing Machines (Capacity Determination and Collection of Duty) Rules 2008.
c. Demand of interest for delay in payment of duty amount of Rs 78,75,000/- for July 2008 (for two days) under Section 11AB of the Central Excise Act 1944 read with Rule 9 of Pan Masala Packing Machines (Capacity Determination and Collection of Duty) Rules 2008.
d. Imposed penalty of Rs 78,75,000/- equivalent to the duty short-paid during July 2008 on the appellant under Section 11AC Read with Rule 17 of Pan Masala Packing Machines (Capacity Determination and Collection of Duty) Rules 2008.
6. Further, the appellants in their appeal inter alia stated as below:
i. They have given an undertaking dated 21.11.2008 for Central Excise duty liability, if any on the goods which were manufactured and sold by their predecessor namely M/s Jalaram Industries Ltd. will be discharged by them.
ii. That after giving the above undertaking, Department issued them show-cause notice dated 06.07.2009 saying that their predecessor namely M/s Jalaram Industries did not satisfy the requirement of Rule 10 of Pan Masala Packing Machines (Capacity Determination and Collection of Duty) Rules 2008. Their predecessor namely M/s Jalaram Industries had informed vide their letter dated 27.06.2008 to Assistant Commissioner of Central Excise, Yeshwanthpur, Bangalore regarding closure of unit for preventive maintenance on 30.06.2008 and in continuation thereof there was suspension of production on 01.07.2008 because of several factors like a) heavy moisture content in the raw material b) shortage of labour c) continued maintenance of 11 Nos. of pouch making machines; and further M/s Jalaram Industries, vide letter their dated 02.07.2008 to the Superintendent of Central Excise Range informed about stoppage of production who after verification were convinced about the closure of the Unit on 30.06.2008. This is clearly vouched by verification certificate dated 01.07.2008 concerning 20 packing machines with the following report:
At the time of visit there was no production of activity. The assessee explained that due to bad weather i.e. Rain they were not able to run the machines. Verified with Daily stock Register. There was no stock"
Further, Central Excise Officers sealed packing machines found in the premises on 02.07.2008 which is evident from the verification certificate as on 02.07.2008 which is to the following effect:
In response to letter dated 2nd July 2008 of M/s Jalaram Industries, intimating the closure of factory, the premises of the factory was visited on 2nd July 2008 and all the twenty packing machines installed in the factory were sealed with wire and lead seal having inscription 1/78 in the presence of the representative of the assessee.
7. The appellants also submit as follows:
As is clear from para 2.4 of show-cause notice, M/s Jalaram Industries vide their letter dated 16.07.2008 requested Central Excise Authorities for unsealing of 10 Nos of packing machines and informed their intention to start activity of manufacture from 17.07.2008 and paid an amount of Rs 78,75,000/- in Union Bank of India. remaining ten pouch making machines were sealed by the Superintendent of Central Excise Range on 17.07.2008. It is obvious and beyond any doubt that there was cessation of production activity, stoppage of production during 30.06.2008 to 16.07.2008 coupled with the fact of sealing of machines on 02.07.2008 consequent to verification done on 01.07.2008 in response to letter dated 30.06.2008 by M/s Jalaram Industries. The sum and substance of the averment in the notice was to the effect that M/s Jalaram lndustries Bangalore did not give the intimation 7 days prior to the commencement of period for which the abatement was sought and hence liable to pay duty of Rs. 1,57,50,000/- determined as above for the entire month without extending any abatement and that in as much as Rs. 78,75,000/- stood paid by them as duty during the month of July 2008, there has been a short payment of duty of Rs.78,75,000/-.
7.1 In addition, the appellants state that the notice makes the averment as if there has been contravention of provisions of Rule 7 and 9 of PMPM Rules in the matter of calculation of duty and payment thereof; the notice contends that in as much as duty for the month of July 2008 needs to be paid on or before 15th day of July 2008 and in view of payment of Rs.78,75,000/- on 17.7.2008 a liability by way of interest under Sec. 11AB of CE Act, 1944 had arisen in terms of second proviso to Rule 9 of PMPM Rules. The appellant submits that the notice has been issued demanding duty, interest and proposing penalty on a wrong premise by erroneous interpretation of the provisions of PMPM Rules and on a situation in which the appellants were placed as the successor of M/s Jalaram industries, when the duty is not at all liable to be paid for the period in respect of which it has been demanded on account of the position that the predecessors during the relevant period did not do any production for a continuous period of more than a fortnight falling within the month of July 2008 concerning which not only an intimation had been made about closure of unit for maintenance with effect from 30.6.2008 and stoppage of production thereafter and the said communication had been followed up by the officials concerned by conducting due verification of cessation of production, stoppage of production activity non availability of stocks vide verification carried out on 1.7.2008 in furtherance of letter dated 30.6.2008 of M/s. Jalaram industries duly enforced by a protective action of sealing all the pouch making machines on 2.7.2008; there is no reason or justification for demanding the duty concerning such of those days of stoppage of production and sealing of machines.
7.3 The appellants submit that the officials of the Bangalore ll Commissionerate simply chose to issue the notice by recourse to erroneous interpretation of the provisions of PMPM Rules as also the object underlying the capacity determination for fixation of duty liability and in doing so merely by relying on time factor envisaged for abatement had gone about as if there had been short payment of duty when the facts on record clearly vouch the position that there was no manufacture during the relevant period commencing from 30.6.2008 to 16.7.2008 and that the liabilities towards duty so determined covering the whole month of July 2008 is totally unreasonable, incorrect, not maintainable and not liable to be paid by M/s. Jalaram industries and in as much the levy sought to be made is not liable for payment; the appellants herein as the successors to M/s. Jalaram industries cannot be legally called upon to pay the same even in terms of the undertaking.
7.4 The appellants further submit that M/s. Jalaram industries vide their letter dated 8/7/2008 had intimated the authorities of their intention to start production activity with effect from 16.07.2008 and requested for seeking release of machines for making certain modifications, that again on 16.7.2008 they had sought unsealing of 10 Nos. of packing machines so as to enable them to start manufacture from 17.07.2008 onwards.
7.5 The appellants also submit that the Learned Adjudicating Authority had however without proper application of mind chose to pass the impugned Order dated 9.4.2014 confirming in verbatim the proposal contained in the notice by demanding duty of Rs.78,75,000/- as if it had been short paid during the month of July 2008 under Sec. 11A of the Central Excse Act, 1944 read with Rule 9 of PMPM Rules, 2008; besides he had confirmed demand of interest under Sec. 11AB of the Act read with provisions of Rule 9 of PMPM Rules 2008 and imposed penalty of Rs.78,75,000/- under Sec. 11AC of the Act read with Rule 17 of PMPM Rules, 2008.
8. The appellants further in their grounds of appeal inter alia plead as under:-
i. The Learned Lower Adjudicating Authority has erred in coming to the conclusion about admissibility of abatement of duty though being convinced of the fact that there was a total stoppage of production ever since 30.6.2008 and that the production activities came to be revived only on 17.7.2008 ii. The Superintendent of Central Excise has on record observed as follows:
At the time of visit there was no production of activity. The assessee explained that due to bad weather i.e. Rain they were not able to run the machines. Verified with Daily stock Register. There was no stock"
This fact was not disputed by the Department either in the show cause notice or discussed by the adjudicating authority in the order-in-original.
iii. The learned adjudicating authority ought to have applied his mind that when Notification No. 38/2007-CE dated 19.12.2007 has been subsisting till it was recinded on 16.7.2008 in terms of Notification No. 44/2008, it does not stand to reason or merit to demand duty for the whole month of July 2008 by disregarding the valid claim of the appellant for the whole reason of which the impugned order is liable to be set aside.
iv. The Learned Adjudicating Authority in any case ought to have seen that the prior intimations mentioned to in PMPM Rules which came into effect from 1.7.2008 had been insisted upon so as to preempt any claim of cessation of work in a retrospective manner and the same is wholly inapplicable in so far as the appellants are concerned when intimation of stoppage of activity for maintenance on 30.6.2008 was made on 27.6.2008 itself, followed by the visit of the officials and true observance of said position as true on 1.7.2008 at the time of their visit coupled with intimation dated 1.7.2008 mentioning suspension of work for pronounced reasons leading to sealing of all the pouch making machines by the officials on 2.7.2008 as a precaution, the normal corollary for any reasonable person would derive is that there was total stoppage and cessation of production up to 16.7.2008 as only on 17.7.2008 unsealing of 10 of the pouch making machines were made and under said facts and circumstances there lies no justification for demand of duty for the whole of month of July 2008 by denying abatement to which the unit was legally entitled to.
v. Learned Commissioner of Central Excise failed to take into account the legal positions that the monthly duty payable for the month of July 2008 in terms of Rule 7 of PMPM Rules,1998 is with reference to number of operating packing machines and in view of the said position and on account of the fact of stoppage of production from 30.6.2008, observance as to no production activity on 1.7.2008, sealing of all pouch packing machines on 2.7.2008, there cannot be any duty liability visiting the unit during the period when the machines were of non functional nature.
vi. The learned Commissioner of Central Excise ought to have considered that when no duty liability had arisen in the matter by way of short payment, there is no question of demand of interest under Sec. 11AB of CE Act, or imposition of penalty under Rule 17 of PMPM Rules.
vii. The Commissioner ought to have taken into account that in order to attract penal provisions under Section 11AC, guilty intent or means rea is pre-requisite and when the same is not there inflicting penalty under Sec. 11AC is wholly unjustified and not legally tenable. The following case laws have been cited by the appellants, here.
1) Commissioner of Central Excise Chandigarh Vs Pepsi Foods Ltd [2008(226)ELT 161 (SC)] [2010(260) ELT 481(SC)]
2) Commissioner of Central Excise, Belgaum Vs Mysore Kirloskar Ltd [2008(226)ELT 161 (SC)]
3) Commissioner of Central Excise, Customs & Service Tax Vs WF Ltd [2011(268)ELT 463 (Guj)]
9. The facts of the case along with the submissions of both sides have been carefully considered. From the facts on record and the submissions of both the sides it is undoubtedly clear that the production started in the month of July 2008, i.e. on 17.7.2008 and continued till the last day of the month i.e. 31.07.2008.
9.1 The appellant is asking for abatement as per the provisions of PMPM Rules 2008 for the period when there was no production i.e. from 01.07.2008 to 16.07.2008. The Department/Revenue is refusing any abatement saying that the appellants (in fact their predecessors namely M/s Jalaram Industries) for whom the appellants took the responsibility as successor to honour the liability of payment of central excise duty, if any should have informed the Department in advance i.e. at least 7 days prior to commencement of closure as per provisions of Rule 10 of PMPM Rules 2008. In this regard, provisions of Rule 10 of PMPM Rules 2008 are quoted below:
RULE 10.?Abatement in case of non-production of goods. - In case a 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 of such goods files an intimation to this effect with the Deputy Commissioner of Central Excise or the Assistant Commissioner of Central Excise, as the case may be, with a copy to the Superintendent of Central Excise, at least seven days prior to the commencement of said period, who on receipt of such intimation shall direct for sealing of all the packing machines available in the factory for the said period under the physical supervision of Superintendent of Central Excise, in the manner that these cannot be operated during the said period :
Provided that during such period, no manufacturing activity, whatsoever, in respect of notified goods shall be undertaken and no removal of notified goods shall be effected by the manufacturer.
Provided further that when the manufacturer intends to restart his production of notified goods, he shall inform to the Deputy Commissioner of Central Excise or the Assistant Commissioner of Central Excise, as the case may be, of the date from which he would restart production, whereupon the seal fixed on packing machines would be opened under the physical supervision of Superintendent of Central Excise.
The above rule says that they have to give intimation at least 7 days prior non-production of goods in their factory. From the facts on record and submissions of both sides it is clearly proved that appellants had intimated well in advance to claim the benefit of this Rule and they were entitled to the facility of abatement in respect of non-production for 16 days in the month of July from 1st July to 16th July, 2008. In this regard it is to be noted that the appellants (their predecessor M/s Jalaram Industries) paid duty of Rs 78,75,000/- for the month of July on 17.07.2008 for the production of 17.07.2008 to 31.07.2008 whereas the department assessed the duty for the month of July as Rs 1,57,50,000/- without giving any abatement facility, which has been found to be not correct, when the appellants are entitled for the said abatement.
9.2 Regarding the demand of central excise duty for the period of 1st July 2008 to 16th July 2008 amounting to Rs 78,75,000/- against the appellants let us refer to the CESTAT Delhi decision in the case of Trimurti Fragrance(P) Ltd Vs CCE Delhi [2015-TIOL-1111-CESTAT-Delhi]. In this case it has been held that when any Pan Masala unit is closed for a period of 16 days in a month, there is no need for the Unit to first pay the duty for the month by the due date i.e. 5th of the month and thereafter claim the abatement and refund. In this regard, the observations of the CESTAT in para 6 of the above order are reproduced below:
6. As regards, the dispute for the month of March 2011, in respect of which the duty demand confirmed is Rs. 32,25,805, there is no dispute that the unit was closed from 1st March 2011 to 16th March 2011 and had functioned only from 17.03.2011 to 31.03.2011. The Department does not dispute that the appellant would be eligible for abatement under Rule 10 of the PMPM Rules for the period of closure from 1st March 2011 to 16th March 2011. The only point of dispute is as to whether for claiming the abatement, the appellant should first pay the duty for the whole month by 5th March 2013 and should have thereafter claimed the abatement. We find that this issue stands decided in the appellants favour by the Tribunal's Final Order No. A-50223-50232/2015-Ex-PB dated 21.01.2015 wherein the Tribunal held that in such cases for claiming abatement it is not necessary that the assessee should pay duty for the whole month and that the assessee would be required to pay proportionate duty only for the number of days for which the unit were functioning. (emphasis supplied). Therefore, so far as the duty demand of Rs. 32,25,805/- is concerned, the same is prima facie not sustainable. Here we note that the Department in the present case, has refused abatement completely which is not correctwhen the facts undoubtedly call for granting abatement to the appellants. Further by this Order we hold that the appellants are clearly entitled to the abatement and regarding the liability of interest we shall discuss later.
9.3 When we find that the appellants are entitled to the abatement, the demand of Rs 78,75,000/- confirmed by the impugned order under Section 11A of Central Excise Act read with Rule 9 of PMPM Rules 2008 does not stand scrutiny of law and is hereby, therefore, set aside.
10. Now let us discuss the issue of demand of interest raised against the appellants and confirmed in the impugned order.
10.1 In respect of interest, the appellants substantially argue that as they did not know when they would commence production, they were not in a position to pay duty of Central Excise in advance i.e. by 5th July, which is the last date fixed as per the provisions of Rule 9 of PMPM Rules 2008 read with sub-sections 2 &3 of Section 3A of the Central Excise Act 1944. In this regard, relevant parts of Rule 9 of PMPM Rules 2008, which gives the manner of payment of duty and interest are given below:
RULE 9.?Manner of payment of duty and interest. - The monthly duty payable on notified goods shall be paid by the 5th day of same month and an intimation in Form - 2 shall be filed with the Jurisdictional Superintendent of Central Excise before the 10th day of the same month :
Provided that monthly duty payable for the month of July, 2008 shall be paid on or before 15th day of July, 2008 :
[Provided further that if the manufacturer fails to pay the amount of duty by due date, he shall be liable to pay the outstanding amount along with the interest at the 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 :
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-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 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 :
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 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 :
Provided also that in case it is found that a manufacturer has manufactured goods of those retail sale prices, which have not been declared by him in accordance with provisions of these 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 period during which such manufacturing took place :
[Provided also that in case a manufacturer does not pay the duty payable and continues to operate any packing machine, he shall be liable to pay the duty for the remaining months of the financial year based on the number of operating packing machines declared in the month for which duty was last paid by him or the total number of packing machines found available in his premises at any time thereafter, whichever is higher. 10.2 In respect of liability of interest for non-payment of dues of Central Excise by the due date, the appellants mainly plead that as they were not knowing when they will commence production, they paid duty for the whole month manufacture when they commenced production, which in this case is 17th July (after making adjustments for the abatement).
10.2.1 Here the pleading by the appellants that they did not know when will they commence production cannot rescue them from the liability of interest for the period of July which is very clear from the reading of the Rule 9 of PMPM Rules 2008 read with Section 3A (2) 2 & Section 3 of Central Excise Act 1944 as 15th July 2008. The laws and rules are same for everyone, whether it is the appellants or others, who are in the industry of manufacturing pan masala or other such items. The appellants cannot take the plea of not knowing when it will commence production when others in the same industry are to follow the same rules; the appellants therefore cannot claim any unfair advantage by taking this plea. Here the appellants delayed their payment for July by two days, when the Rule 9 of PMPM Rules 2008 fixes the responsibility of payment for the month of July as on or before 15th July 2008. There is clearly liability for payment of interest on the duty of Rs 78,75,000/- which was paid after the due date in the month of July 2008. This liability of interest on the said duty of Rs 78,75,000/- was confirmed by the impugned order at para 14.14.(c) and the same is hereby sustained under Rule 9 of PMPM Rules 2008 read with Sections 3A (2&3) of Central Excise Act 1944 is hereby sustained and the plea in this regard of the appellant is hereby rejected. Here the CESTAT Delhis decision in the case of Trimurti Fragrance (P) Ltd (supra) supports the stand that appellant is liable to pay interest as per the provisions of PMPM Rules 2008 for the period of delay. In respect of liability of interest Honble Delhi High Court in the case of CCE Delhi I Vs Shakti Fragrances Pvt Ltd [2015(324)ELT 390(Del)] also held that wherever there is delay in payment of duty, the assessee would be liable to pay the interest for the period of late deposit of duty. In this regard para 12 of the decision of Honble Delhi High Court is reproduced below:
12.?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 31st August, 2012 and an abatement order has also been passed on 28th August, 2012. However, the assessee would be liable to pay the interest for the period of late deposit of duty.(emphasis supplied).
10.3 Here it is to be noted that the Commissioner in his impugned order at 14.14(b) confirmed the interest against the demand of Rs 78,75,000/- which he had confirmed at Para 14.14(a) in his order, and which by this Order we are dropping. Consequently, this demand of interest confirmed in his Order at para 14.14(b) is not sustainable and is hereby dropped.
11. Further when we are setting aside the main demand of Rs 78,75,000/- imposed by the impugned order at para 14.14(d) there can not be imposition of any penalty under Section 11AC of Central Excise Act read with Rule 17 of PMPM Rules 2008 and penalty of Rs 78,75,000/, therefore, is hereby dropped.
13. The appeal is decided in above terms.
(Order pronounced in open court on )
ASHOK K. ARYA
TECHNICAL MEMBER
M.V.RAVINDRAN
JUDICIAL MEMBER
pnr
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