Appellant granted duty abatement under Rule 10 for non-production period but penalty upheld for clearing notified goods

CESTAT Ahmedabad ruled that appellant was eligible for duty abatement under Rule 10 of Pan Masala Packing Machines Rules, 2008 for non-production period from 16-11-2012 to 30-11-2012. The tribunal held that duty cannot be demanded when machines are not operational, provided proper intimation is given to jurisdictional officers for sealing/de-sealing. The duty demand with interest was set aside for November 2012 non-production period. However, penalty under Rule 27 of Central Excise Rules 2002 was upheld for clearing previously produced notified goods. Appeal was allowed in part.

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Issues involved: Eligibility for "Abetment" under Rule 10 of Pan Masala Packing Machines (Capacity Determination and Collection of Duty) Rules, 2008.

The judgment addresses the issue of whether the Appellant is eligible for "Abetment" under Rule 10 of the Pan Masala Packing Machines (Capacity Determination and Collection of Duty) Rules, 2008. The Appellant, a manufacturer of "Notified Goods" (Pan Masala containing Tobacco), operated a Pouch Packing Machine (PPM) under Compounded Levy. The dispute arose when the Appellant did not produce any Notified Goods during a specific period, leading to a demand for additional duty by the Revenue. The Appellant argued that as per Rule 10, abatement of duty is applicable when Notified Goods are not produced for a continuous period of 15 days or more, which they claim to have fulfilled. The Appellant cited various legal precedents to support their case, emphasizing the non-production of Notified Goods during the relevant period. The Revenue, on the other hand, supported the findings of the lower authorities and opposed the Appeal.

The Tribunal examined the submissions from both sides and analyzed the relevant provisions of Rule 10 of the Pan Masala Packing Machines Rules. It was noted that the Appellant had followed the necessary procedures for sealing and de-sealing the machine as required by the rule. The Tribunal concluded that the Appellant was eligible for abatement of duty for the period in question as they had not produced any Notified Goods during that time. The judgment highlighted that the mandatory condition for abatement is the non-production of Notified Goods for over 15 days in a month, which the Appellant had satisfied. The Tribunal also upheld the penalty imposed on the Appellant for the lapse in removing goods during the closure of the PPM, as per Rule 27 of the Central Excise Rules 2002.

In conclusion, the Tribunal allowed the Abatement under Rule 10 for non-production of Notified Goods in November 2012, setting aside the duty demand with interest. However, the penalty imposed under Rule 27 of the Central Excise Rules 2002 was upheld. The impugned orders were modified accordingly, and the Appeal was partly allowed with consequential relief as per the law.

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