2013 (1) TMI 250

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....by the duty demand of Rs. 5,46,774/- was confirmed against the appellant along with interest. 2. M/s. Rajat Industries Pvt. Ltd., the appellant herein applied for central excise registration and they were issued a Central Excise Registration No. AAECR 0171 QXM001 on 11-12-2008 for manufacture of Gutkha falling under Chapter 2403 of the First Schedule to the Central Excise Tariff Act, 1985. The appellant company vide its letter 27-4-2009 for the first time filed declaration as required under Pan Masala Packing Machines (Capacity Determination & Collection of Duty) Rules, 2008 [PMPM Rules] and requested the Department to make four machines installed in the factory operational with effect from 4-5-2009 were de-sealed by the Department ....

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....ot sustainable as it is based upon incorrect reading of PMPM Rules, 2008. Learned Counsel submitted that Commissioner (Appeals) has failed to appreciate that the appellant was a new unit and it commenced production only with effect from 4-5-2009. As such, there was no occasion for charging him for the excise duty for the period when the appellant had not been even commenced production. Appellant in support of his contention has relied upon the judgment of Punjab & Haryana High Court in the matter of Godwin Steels (P) Ltd. v. C.C.E., Chandigarh - 2010 (254) E.L.T. 202 (P & H) wherein while considering the scope of production capacity based on compounded levy scheme having provision similar to PMPM Rules, 2008 took the view that when the fact....

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....ion. The department is seeking to justify the impugned order under Rule 9 of PMPM Rules of 2008 framed under Section 3A of the Central Excise Act. Section 3A confers power on the Central Government to charge excise duty on the basis of capacity of production in respect of notified goods. The basic object of conferring such power on the Central Government is to prevent evasion of excise duty in respect of certain excisable goods with a view to safeguard the interest of revenue. This, does not mean that Section 3A confer power on the Government to frame the rules to charge excise duty for the period prior to the commencement of production. Therefore, in our view the impugned order confirming demand for first three days of May 2009 when the pr....