TaxTMI 
TaxTMI 
2018 (7) TMI 1045
X X X X Extracts X X X X
X X X X Extracts X X X X
....earance of Pan Masala and Gutkha under the brand name 'Shyam Bahar'. The respondent-assessee is paying duty under the Pan Masala Packaging Machines (Capacity Determination and Collection of Duty) Rules, 2008 (hereinafter referred to as PMPM Rules, 2008) which came effect from 1st July, 2008 under Section 3A of the Central Excise Act, 1944. Respondent filed the declaration on 28th April, 2010 in the prescribed form-1 effective from 1st May, 2010 to the effect that the respondent had 45 pouch packing machines, out of which 42 pouch packing machines will be engaged in manufacture and packing of 'Shyam Bahar' Brand Gutkha of M.R.P. Rs. 1. Accordingly, the concern Range Officer acting upon the declaration issued 'Instructions, for Sealing/Unsealing'. As per report in this regard, balance 4 machines were uninstalled and sealed. 3. On 2nd May, 2010 at around 15:00 hours in the presence of two independent witnesses and Shri Agnihotri, the Authorized Signatory and respondent herein, a surprise check was conducted in the factory. Shri Agnihotri looked after the work of production and clearance. On being asked, he produced the copy of form-1 (declaration) which was submitted to the Departmen....
X X X X Extracts X X X X
X X X X Extracts X X X X
....ed at Rs. 90,000/- per machine) to redeem on payment of fine Rs. 2,50,000/-. Further, penalty of Rs. 5 lakhs was imposed on Shri Agnihotri, Authorised Signatory of 'Sham Traders'. Being aggrieved, the respondents preferred appeals before learned Commissioner (Appeals) on the following grounds:- "1. The machines were never installed and thus no violation can be attributed in terms of Rule 8 of PMPM Rules, 2008. This fact can be verified from the photographs taken on the spot by the department. 2. No manufacturing activity was carried on on the subject machines as is evident from the panchnama dated 02.05.2010. 3. The machines were not operating packing machines so the invocation of the provisions of Rule 7 of PMPM Rules, 2008 is unwarranted." At the time of personal hearing learned counsel for the respondents further submitted additional written submissions to the effect contesting the legality of the statement under Section 14 given on 02/05/2010 by the respondent-Shri Agnihotri. It was further urged that the said statement cannot be used as evidence against the respondents, as no summon was ever issued to him and the impugned statement was not recorded before the superintend....
X X X X Extracts X X X X
X X X X Extracts X X X X
....perative for the purpose of Central Excise duty under Rule 7 of the Rules ibid. But, neither in the show cause notice nor in the panchnama, it was alleged/mentioned that three machines under reference were installed. Instead, the panchnama drawn in the presence of two independent witnesses, declares that no manufacturing activity was taking place on these 03 machines though the remaining 42 installed machines were found to be engaged in manufacturing. It is an undisputed fact that no machine can manufacture without being installed. Shri Awdhesh Agnihotri in his on the spot statement dated 02.05.2010 deposed that he had no knowledge of seals being broken but the machines were not involved in any manufacture as they were not connected to any hopper, electric motor, heater etc. which could be verified from the photographs of the idle machines which were made RUDs in the impugned SCN. The fact of the matter is that instead of establishing that the three machines under consideration were involved in manufacturing activities during any period between 01.05.2010 and 02.05.2010, the department seemed content merely on breaking of seals on these machines. My this observation finds force fro....
X X X X Extracts X X X X
X X X X Extracts X X X X
....isolation (as per photographs). For me this is a very grave error committed by the visiting officials when the entire case was erected mainly for the violation of Rule 7 and Rule 8 of PMPM Rules, 2008, which clearly stipulates that only an installed packing machine would be considered operating for the purpose of payment of Central Excise duty under these Rules. Consequently, on the basis of discussions supra, I hold that the machines were never installed between the period 01.05.2010 to 02.05.2010 and thus there was no violation of provisions of Rule 7 and Rule 8 of PMPM Rules, 2008. Hence, I am of the opinion that demand of duty does not survive. Now, I come to seizure of subject three machines and confiscation thereof. The seizure was effected under Section 110 of the Customs Act, 1962 which was made applicable to like matters of Central Excise vide Notification No.68/63-CE dated 04.05.1963. Apparently, the three machines were seized albeit without any motive of revenue augmentation as the seals on them were found broken. The demand was raised for the entire month of May'10 irrespective of the machines being seized. In fact, in my opinion, the seizure inflicted only adverse rev....
X X X X Extracts X X X X
X X X X Extracts X X X X
.... disclosing identity of the officer who recorded it of no evidentiary value, and not admissible in evidence- Section 14 of Central Excise Act, 1944. Considering this, one can very well imagine the impasse that could have been created on account of a possible subsequent retraction by the appellant no 2 as the machines under reference had already been sealed and locked in a room by the time the proceedings under panchnama, ended. Besides, no summon under Section 14 of the Act ibid, was ever issued to the appellants. Also, barring the signatures of a solitary Inspector, the panchnama did not reflect the presence of other competent officers though it was mentioned in the panchnama that a team of Central Excise officers visited the factory premises." 6. Being aggrieved, the revenue have filed these appeals on the ground that the observation of the Commissioner (Appeals)- "from the above synopsis, case records and written submissions made by the respondents, I reached to the conclusion that the instant case is buildup of visiting Central Excise officials, arbitrary, irrational and careless approach and the respondents cooperation or generosity to be precise". Further, the learned Commis....