Custom, Excise & Service Tax Tribunal
Cce & St Sonepat (Delhi-Iii) vs M/S Tej Ram Dharam Paul on 7 February, 2018
CUSTOMS, EXCISE AND SERVICE TAX APPELLATE TRIBUNAL SCO 147-148, SECTOR 17-C, CHANDIGARH 160 017 SINGLE MEMBER BENCH COURT NO. II APPEAL NO. E/60945/2017-EX[SM] [Arising out of Order-in-Appeal No. Appl/PKL/Cmmr/57/2017 dated 14.08.2017 passed by the Commissioner of Central GST (Appeals), Panchkula] Date of hearing/decision: 07.02.2018 For approval and signature: Honble Mr. Devender Singh, Member (Technical) CCE & ST Sonepat (Delhi-III) : Appellant(s) VS M/s Tej Ram Dharam Paul : Respondent(s)
Appearance:
Present for the Appellant(s): Sh. A.K. Saini, A.R. Present for the Respondent(s): Sh. Ashwani Sharma, Advocate CORAM:
Honble Mr. Devender Singh, Member (Technical) FINAL ORDER NO. 60123/2018 Per : Devender Singh Revenue is in appeal against the Order-in-Appeal dated 14.08.2017 wherein the Ld. Commissioner (Appeals) has set aside the order of the adjudicating authority on the issue of liability to pay interest on the central excise duty deposited by the respondent.
2. Brief facts of the case are that the respondent is a manufacturer of branded Chewing Tobacco and operating under Compounded Levy Scheme as per Chewing Tobacco and Unmanufactured Tobacco Packing Machines (Capacity Determination and Collection of Duty) Rules, 2010 (in short, CTUTPM Rules, 2010) and is having installed one single track FFS packing machine. The said machine was sealed/uninstalled during the periods 15.04.2015 to 22.05.2015 and 01.06.2015 to 15.06.2015 in the months of May 2015 and June 2015 respectively. The respondent deposited the central excise duty on prorata basis for the number of days the machine remained operational during the month of May 2015 and June 2015 amounting to Rs.11,21,806/- for May 2015 and Rs.19,32,000/- for June 2015. However, the Department issued a show cause notice on 28.11.2015 seeking deposit of duty of Rs.38,64,000/- for both the months along with interest, besides proposing penal action against the respondent. The adjudicating authority dropped the demand of differential excise duty, but confirmed the demand of interest on the duty late deposited by the respondent for the months May 2015 and June 2015. Aggrieved from the same, the respondent filed an appeal before the Commissioner (Appeals), who set aside the order of adjudicating authority on the liability to pay interest. Aggrieved from the same, the Revenue has filed this appeal.
3. Ld. A.R. appearing for the Revenue submits that the Commissioner (Appeals) has wrongly applied the 5th proviso of Rule 9 of CTUTPM Rules, 2010 because there was no new machine which was installed and that Ld. Commissioner (Appeals) instead should have gone by the 2nd proviso to Rule 8. He also relied upon the judgment of Honble Delhi High Court in the case of CCE, Delhi-I vs. Shakti Fragrances Pvt. Ltd. Unit-II reported in 2015 (324) ELT 390 (Del.).
4. Ld. Advocate appearing for the respondent submits that Rule 6 of the Chewing Tobacco and Unmanufactured Tobacco Packing Machines (Capacity Determination and Collection of Duty) Rules, 2010, provides for the concept of available machines, installed machine and the machines intended to be operated and therefore sub-rule (5) of Rule 6 has provision for uninstallation and sealing of the machine, which the manufacturer does not intend to operate. He invited attention to Rule 7 of the said Rules and contended that the duty has to be calculated on the basis of the number of machines operating during that month. He also contended that as per the 2nd proviso of Rule 8, only the non-working of an installed packing machine was deemed to be an operating packing machine for the month. He further argued that the 5th proviso of Rule 9 was applicable as the number of operating packing machines had increased on account of installation of a de-sealed packing machine during the impugned periods. He relied on the following case laws:
(i) Trimurti Fragrance Pvt. Ltd. vs. CCE, Delhi-II 2016 (335) ELT 167 (Tri.-Del.)
(ii) Jaiswal Products vs. CCE, Delhi-II 2016 (344) ELT 636 (Tri.-Del.)
(iii) Satya Prakash & Co. vs. CCE, Agra 2017 (352) ELT 60 (Tri.-All.)
(iv) Taste Well Product vs. CCE, New Delhi 2016 (335) ELT 55 (Tri.-Del.)
(v) Dharampal Premchand Ltd. vs. CCE, Noida Final Order No. 71934/2017 dt. 20.09.2017 in Appeal No. E/70191/2017
(vi) M/s Shree Flavours LLP vs. Delhi-II - Final Order No. 51732-51733/2016 dt. 03.05.2016 in Appeal No. E/50242-50243/2016
(vii) CCE, Delhi-II vs. M/s Vasundhara Flavours Final Order No. 50144-50145/2016 dt. 25.01.2016 in Appeal No. E/55360 & 55563/2014.
5. Heard the parties and examined the record.
6. I find that in the present case, the respondent was not having any machine in operation during the period 15.04.2015 to 22.05.2015 and 01.06.2015 to 15.06.2015 in May 2015 and June 2015 as the same had been sealed and deemed uninstalled. As such no duty could be discharged in advance. After intimation to the department, the machine was desealed on 23.05.2015 and 15.06.2015 by Range Officer, and during the last 9 days/last fortnight of the respective months, the machine was put to operation and the duty applicable was paid before the end of the respective months, which is before the 5th of the following month. In such a situation, this Tribunal has repeatedly held that the interest liability does not arise as the machine was unsealed and re-installed only after middle of the month or nine days before of the close of the month. In this regard, the judgment of this Tribunal in the case of Trimurti Fragrance Pvt. Ltd. (supra) is applicable to the facts of this case, wherein the Tribunal held as below:
7. Rule 8 obligates a manufacturer to file a declaration in Form1 serial No.5 of the Form I requires intimation of the number of single track packing machines available in the factory; serial No.6 requires intimation as to the number of packing machines which are installed in the factory of the declarant; and serial No.7 requires intimation /specification of the number of packing machines installed, which the manufacturer intends to operate in its factory for production of notified goods. Rule 7 specifies that the duty payable for a particular month shall be calculated by application of the appropriate rate of duty specified in the notification of the Government to the number of operating packing machines in the factory during the month. Rule 8 enjoins that in case of addition or installation or removal or uninstallation of a packing machine in the factory during the month, the number of operating packing machine for the month shall be taken as the maximum number of packing machines installed on any day during the month. The provisions of Rules 6(4) and 6(5) are also relevant. Sub-rule (4) enacts that the number of operating packing machines during any month shall be equal to the number of packing machines installed in the factory during that month. This provision thus presumes that installed packing machines correspond to operating packing machines and the duty paid or duty payable under Rule 7 is in terms of the installed machines. Sub-rule (5) of Rule 6, however enacts that the machine 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; and the proviso thereto states that where it is not feasible to remove such packing machine out of the factory premises, it shall be uninstalled and sealed by the Superintendent of Central Excise in such a manner that it cannot be operated.
8. On true, fair and interactive analysis of the Rules and in particular Rules 6 to 13 the conclusion is irresistible and compelling that where during any period, a manufacturer intimates its intention not to operate a packing machine and the same is sealed by the authorized officers, such machine is deemed have been uninstalled in terms of Rule 6(5). Third proviso to Rule 9 provides 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.
9. In the facts of this case, the sealing of the 12 machines of the appellant occurred prior to 1.7.2013. The machines were inoperative during 1.7.2013 to 7.7.2013. The machines were unsealed and reinstalled on 8.7.13. This is evident from the abatement order dated 20.9.2013. In the circumstances under the third proviso to Rule 9, the duty was payable by the 5th of August, 2013. Duty was in fact paid on 27th July, 2013. There is therefore no delayed payment of duty warranting levy of interest under Section 11AA of the Act. Similar view has been taken by this Tribunal in identical circumstances in the cases of M/s Shree Flavours LLP (supra) and M/s Vasundhara Flavours (supra).
7. I also find that the judgment relied upon by Ld. A.R. in the case of Shakti Fragrances Pvt. Ltd. (supra) is not applicable to the facts of this case as machines were installed and operated on 1st day of August 2012 to 13th August 2012 in that case whereas machine was not installed and operated from 1st to 22nd May and from 1st to 15th June in present case.
8. By following the judgments cited in para 6 above, I find that there is no infirmity in the order of Commissioner (Appeals) and the same is upheld.
9. In the result, the appeal filed by the Revenue is dismissed.
(Dictated and pronounced in the open court) Devender Singh Member (Technical) RAS 6 E/60945/2017-EX[SM]- CHD