Custom, Excise & Service Tax Tribunal
M/S. Jaiswal Products vs C.C.E. Delhi-Ii on 3 July, 2015
IN THE CUSTOMS, EXCISE AND SERVICE TAX
APPELLATE TRIBUNAL, NEW DELHI
PRINCIPAL BENCH, COURT NO. III
Excise Appeal No. E/51382/2014-E[SM]
[Arising out of Order-In-Appeal No. 161/2013 dated: 27.12.2013 passed by CCE Delhi-II]
For approval and signature:
Hon'ble 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?
M/s. Jaiswal Products ...Appellant
Vs.
C.C.E. Delhi-II Respondent
Appearance:
Mr. Prabhat Kumar, (Advocate) for the Appellant Mr. Pramod Kumar, Commissioner (D.R.) for the Respondent CORAM:
Hon'ble Mr. S.K. Mohanty, Member (Judicial) Date of Hearing. 03.07.2015 Final Order No. 54019 /2015_ Per S.K. Mohanty:
The appellant is engaged in the manufacture of Chewing Tobacco falling under Chapter Sub-Heading No. 2403 9910 of the Central Excise Tariff Act, 1985. The procedures of installation and operation of chewing tobacco Packing machines, payment of Central Excise Duty etc. by the manufacturer are governed under the provisions of Chewing Tobacco and Unmanufactured Tobacco Packing Machines Rules, 2010, notified under Section 3A of the Central Excise Act, 1944.
2. Rule 6 of the said rules provides that a manufacturer has to file a declaration in the prescribed form, declaring inter-alia, the number of packing machines installed in the factory. Manner of payment of duty is contained in Rule 9 of the said rules, which mandates that the monthly duty payable on notified goods shall be paid by the 5th day of the said month. Interest liability for non-payment of the amount of duty within the stipulated time is contained in the second proviso to Rule 9 of the said rules, according to which, interest shall be payable at the applicable rate, for the period starting with the first day after the due date, till the date of actual payment of the outstanding amount. The third proviso appended to Rule 9 provides that in case of increase in the number of packing machines on account of addition or installation during a particular month, the differential amount, if any, shall be paid by the 5th day of the following month. In case a factory did not produce the notified goods during any continuous period of fifteen days or more, Rule 10 of the said rules provides for abatement from the duty already paid in advance for the said month.
3. In the present case, the factory of the appellant was not in operation during the period from 01.06.2013 to 22.06.2013. Thus, in terms of Rule 10 of the said rules, the appellant had applied for abatement of duty, which was considered by the Jurisdictional Central Excise Authorities. Out of total duty of Rs. 32 lakhs paid by the appellant for the month of June' 2013, an amount of Rs. 23, 36,667/- was sanctioned as abatement. However, out of such sanctioned amount of abatement, an amount Rs. 29,984/- was deducted towards interest on the ground that there was delay of 19 days in payment of duty by the appellant. For confirmation of interest liability, the adjudication order has invoked the second proviso to Rule 9 read with Section 11AA of the Central Excise Act, 1944. According to the adjudicating authority, since the statute requires that the duty should be deposited on the 5th day of the relevant month and the appellant deposited the duty on 24.06.2013, interest liability is automatic, which is required to be paid by the appellant. The interest liability confirmed in the adjudication order was appealed against by the appellant before the Ld. Commissioner (Appeals). The appeal was disposed of vide the impugned order, wherein the period of delay was reduced from 19 to 18 days, but the interest liability confirmed in the adjudication order was upheld. Confirmation of interest liability in the impugned order is the subject matter of present dispute before this Tribunal.
4. The Ld. Advocate, Sh. Prabhat Kumar appearing for the appellant submits that though Rule 9 provides that the duty liability has to be discharged on the 5th day of the same month, but due to the fact that the factory was closed on the said due date, the duty amount was deposited immediately upon re-commencement of the production activities i.e. on 24.06.2013. According to the Ld. Advocate, since there was no occasion/scope for payment of duty on 5th of June' 2013, and the amount was paid immediately on resumption of production activities, the interest liability cannot be fastened on the appellant. To support such views, the ld. Advocate contends that instead of the second proviso of Rule 9, the third proviso contained therein is applicable to the facts of the case, according to which, the duty for the month of June' 2013 is payable on the 5th day of the next month; thus, there is no delay in payment of the duty amount. In context with non-payment of interest, the ld. Advocate relies on the judgment of the Honble Supreme Court in the case of Pratibha Processors vs UOI, reported in 1996 (88) ELT 12 (S.C.) and UOI vs Bangalore Wire Rod Mill reported in 1996 (83) ELT 251 (S.C.).
5. Per contra, Ld. D.R., Sh. Pramod Kumar appearing for the respondent submits that as per the requirement of Rule 6 of the rules, since the appellant had informed the Department regarding the number of pacing machines installed in the factory by way of filing statutory declaration, the duty liability was required to be discharged on the stipulated time frame, irrespective of the fact as to whether the machines were in operation or not. It is his further submission that second proviso to Rule 9 clearly provides that in absence of non-payment of the duty within the stipulated date i.e. the 5th of the same month, the assessee is exposed to the interest liability.
6. Heard the ld. counsel for both sides and perused the records.
7. The short question involved in this appeal for consideration by this Tribunal is as to whether the interest liability is required to be discharged by the appellant especially in view of the undisputed fact that the factory was not in operation during the period from 01.06.2013 to 22.06.2013, and the duty abatement was allowed by the department based on the information furnished by the appellant.
8. It is an admitted fact that based on the declaration filed by the appellant that the factory was closed from 01.06.2013 to 22.06.2013, the Jurisdictional Central Excise Authorities have allowed the abatement as claimed under Rule 10 of the said Rules. The requirement of payment of duty by 5th of the same month as contemplated under Rule 9, denotes that the packing machines installed in the factory shall be operational throughout the month. In case of non-production of the notified goods for a continuous period of fifteen days or more, provisions have been made under Rule 10 for refund of the amount of duty paid in advance by way of abatement. On a conjoint reading of Rules 9 and 10, it transpires that if the production activity is suspended beyond a period of fifteen days, then duty liability for those days cannot be fastened on the manufacturer. In the case in hand, since the production activity was suspended on 01.06.2013 and continued till 22.06.2013, in my opinion, there was no occasion for payment of duty in advance on 05.06.2013 for the whole month of June' 2013, for the reason that the appellant might not haveaware as to how long the factory will remain un-operational. On resumption of the production activity on 23.06.2013, since the appellant promptly deposited the duty on the very next day, i.e. on 24.06.2013, in my opinion, there was no delay in payment of duty and therefore the interest liability cannot be fastened on the appellant.
9. The second proviso affixed to Rule 9, providing for payment of interest for delayed payment of duty, in my opinion, is not applicable to the facts of this case, inasmuch as, interest liability is fastened in a situation where the manufacturer fails to pay the duty by the due date. In the case in hand, the production activity in the factory of the appellant was continuously suspended for a period of 22 days, w.e.f. 1st of June' 2013. Thus, there was no scope or event to pay the duty on the 5th day of the said month. Rather, the case of the appellant is more akin to the third proviso to Rule 9 read with sub-rule (5) of Rule 6 and second proviso to Rule 10, which deal with un-installation/sealing/opening of the packing machines. Thus, the situation envisaged in this case is to be construed as if it involved addition or installation of new machines, for which the duty liability for a particular month has to be discharged on the 5th day of the following month, and not on 5th day of the same month in advance.
10. In view of above discussions and analysis, since there is no delay in payment of duty within the stipulated time fame, the appellant is not liable to pay the interest amount confirmed by the authorities below in view of the principle decided by the Honble Supreme Court in the case of Pratibha Processors (supra), wherein it has been held that the interest is compensatory in character and is imposed on the assessee who has withheld payment of any tax as and when it is due and payable.
11. Therefore, I do not find any merits in the impugned order, and thus, the same is set-aside and the appeal is allowed in favour of the appellant.
(Dictated and pronounced in open court) (S. K. Mohanty) Member(Judicial) Neha Page | 6