2017 (11) TMI 1272 - AT - Central Excise

Tribunal rules excise duty on new machines must be paid for whole month, not just operational days

M/s Shri Flavours Ltd. Versus CCE Delhi And (Vice-Versa)

The Tribunal upheld the Adjudicating Authority's decision that excise duty for new machines in a factory must be paid for the entire operational month, ... Abatement - closure of factory - chewing tobacco pouches - additional machine installed in the three months for the full month - Held that: - Rule 8 provides that if any new machine is installed on any day during the month, it is to be considered as operating for the full month. However, Rule 10, which deals with abatement, provides for non-payment of duty in respect of the factory which is closed for more than 15 days - In respect of the three months in dispute, it is not in dispute that the factory was closed for more than 15 days. By reading together Rule 8 and 10 we reach the conclusion that in respect of the new machines added, duty is required to be paid for the entire period for which factory was working. Since, the demand has been confirmed by the Adjudicating Authority only on the above basis, we uphold the same. Appeal dismissed - decided against appellant. Issues:- Calculation of excise duty for new machines installed in the factory- Interpretation of Chewing Tobacco and Unmanufactured Tobacco Packing Machine Rules 2010- Application of Rule 8 and Rule 10 in duty calculation- Dispute regarding duty demand for specific monthsAnalysis:The case involved a dispute over the calculation of excise duty for new machines installed in a factory manufacturing chewing tobacco pouches. The appellant contended that duty should only be charged for the days the new machines operated, based on Rule 10 providing abatement for non-production periods. The Revenue argued that duty for new machines should be paid for the entire month, as per Rule 8. The Tribunal analyzed Rule 8 and Rule 10, noting that Rule 8 deems new machines operational for the entire month, while Rule 10 allows abatement for factory closure exceeding 15 days.The appellant claimed that duty had already been paid for the operational days of the new machines, thus no further duty should be demanded. The Tribunal upheld the Adjudicating Authority's view that duty for new machines must be paid for the entire period the factory was operational, considering the combined application of Rule 8 and Rule 10. As the duty demand was based on this interpretation, the Tribunal upheld the decision.The Revenue's appeal, seeking full duty payment for new machines, was dismissed by the Tribunal. The Tribunal relied on a decision of the Hon’ble Gujarat High Court, emphasizing that duty need not be paid for periods when the factory was closed for more than 15 days. Consequently, the Tribunal found no justification for demanding duty during factory closure periods. The Tribunal concluded that the duty demand was correctly based on the factory's operational days, in line with Rule 8 and Rule 10.In summary, the Tribunal dismissed appeals from both parties and upheld the impugned order, emphasizing the correct application of Rule 8 and Rule 10 in determining excise duty for new machines in the factory. The decision was pronounced on 02/11/2017.