Court grants exemption, upholds duty determination based on rules, dismisses appeal, no penalties imposed

The court allowed the exemption application subject to exceptions, condoned the delay in filing the appeal, and upheld the determination of duty based on the rules applicable at the time of the search, rejecting the Revenue's argument for retrospective application of amended rules. The court dismissed the appeal, finding it unmerited, and no penalty was imposed on respondent no. 2.

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Issues Involved:
1. Exemption Application
2. Condonation of Delay
3. Determination of Quantum of Duty
4. Imposition of Penalty

Summary:

Exemption Application:

1. Exemption is allowed, subject to all just exceptions.

2. The application is disposed of.

Condonation of Delay:

3. For the reasons stated in the application, delay in filing the present appeal is condoned.

4. The application is disposed of.

Determination of Quantum of Duty:

5. The Revenue filed the appeal under Section 35G of the Central Excise Act, 1944, challenging the final order dated 29.09.2022 passed by the Customs, Excise & Service Tax Appellate Tribunal (the Tribunal).

6. The controversy relates to the quantum of duty payable by the respondents. The Tribunal upheld the Order-in-Original dated 30.11.2017 by the Principal Commissioner Central Tax, determining the duty based on the Pan Masala Packing Machines (Capacity Determination and Collection of Duty) Rules, 2008 (PMPM Rules) before the Second Amendment Rules came into force on 20.10.2008.

24. The premises of respondent no. 1 was searched on 04.08.2008, and Rule 17 of the PMPM Rules as in force was applicable. The Adjudicating Authority determined the duty payable in terms of Rule 17(2) of the PMPM Rules as on the date of the search.

25-27. The Revenue contended that the duty should be determined based on Rule 17(2) of the PMPM Rules as substituted by the Second Amendment Rules. However, the Tribunal found no error in the Order-in-Original dated 30.11.2017 and rejected this contention, stating that the amended rule does not apply retrospectively.

28-29. The court found no infirmity in the Tribunal's view that the amended Rule 17(2) would not apply to searches conducted prior to 20.10.2008.

30-33. The court emphasized that laws affecting rights apply prospectively unless expressly stated otherwise. The amended Rule 17(2) does not implicitly apply retrospectively for searches conducted before 20.10.2008.

34. The questions projected by the Revenue are answered against the Revenue.

35. The appeal is unmerited and accordingly dismissed.

Imposition of Penalty:

18. The Tribunal did not consider the imposition of penalty on respondent no. 2 as no submissions were advanced by the Revenue on this issue. The Tribunal found no error in the computation of duty by the Adjudicating Authority.

19. The Revenue accepted the decision of not imposing any penalty on respondent no. 2 but contested the computation of excise duty.

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