AI Drafter 
TaxTMI 
TaxTMI 
2019 (1) TMI 901
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....ing under Tariff Item 2403 99 10 of the First Schedule to the Central Excise Tariff Act, 1985. Chewing Tobacco manufactured with the aid of packing machines and packed in pouches is notified under the Notification No 10/2010-CE(NT) dated 27.02.2010 issued under Section 3A(1) of the Central Excise Act, 1944(Excise Act) which deals with compounded levy scheme applicable to manufacturers of certain items, including Chewing Tobacco. 2.1 Appellant is operating under the Chewing Tobacco & Unmanufactured Tobacco Packing Machines (Capacity Determination & Collection of Duty) Rules, 2010 (CTD Rules for short) and paying duty on its products based on the periodic orders passed by the Deputy Commissioner determining the annual capacity of production of the Appellant (ACD Orders) under Rule 6(6) of the CTD Rules. 2.2 The ACD orders are based on the declarations under Form-1 submitted by the Appellant. Depending upon the demand for its products and other business exigencies, the Appellant discontinues production of various pouches of different Retail Sales Prices (RSPs) and commences manufacture of new RSPs. This led the Appellant requesting for sealing or unsealing of some or all its ins....
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....07.12 to 31.07.12 August 2012 24.08.12 to 31.08.12 01.08.12 to 31.08.12 11.08.12 to 19.08.12 September 2012 ----- 01.09.12 to 30. 09. 12 16.09.12 to 30.09.12 2.7 Thus, during the period of dispute, Appellant was paying the Central Excise duty only for the days on which machines were lying unsealed and installed, by claiming the benefit of suo moto abatement under Rule 10 (for February 2012) and benefit of pro- rata duty calculation under 4th Proviso to Rule 9 (for April 2012 to September 2012) of the CTD Rules, for the number of days the machines were lying sealed and uninstalled. 2.8 In view of the aforesaid facts, Show Cause Notice dated 11.12.2012(SCN) was issued to Appellant, proposing demand of excise duty amounting to Rs. 2,77,25,177/- and recovery of the same under Section 11 A(1) of the Excise Act, along with interest under Section 11 AA ibid and penalty under Rule 17 of the CTD Rules. The SCN alleged, inter alia, that duty appears to be payable for the maximum number of machines operated during the month as per Rule 7 and 8 of the CTD Rules, thus, Appellant's practice of paying duty only for the days of the month for which the particular machi....
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....012 to 31.10.2012 and 16.10.2012 to 25.10.2012, respectively, has already been decided in favour of the Appellant by the Hon'ble CESTAT, New Delhi, vide Final Order No. 51682/2018 dated 12.04.2018. The benefit for the period 01.10.2012 to 15.12.2012under Rule 10 had been allowed by the First Appellate Authority itself. However, the benefit under the 4th proviso to Rule 9 was not allowed, which was allowed by the Hon'ble CESTAT, New Delhi holding that the benefit of the 4th proviso to Rule 9 is applicable in cases, where the production of goods of a new RSP, which has not been earlier manufactured during the month, is commenced by the manufacturer, even if the goods bearing such RSP were being manufactured in the earlier months. Similarly, the benefit under 4th proviso to Rule 9 is also admissible in cases, where the production of goods of existing RSP is discontinued during the month, even if the production of such goods is again commenced in the succeeding months. 3.2 Thus, it is humbly submitted that the benefit of Rule 10 and 9 has been correctly claimed by the Appellant even during the relevant period and the impugned order denying the same is liable to be set aside.....
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....e proposed closure of the factory, upon receipt of which machines shall be sealed by the Department so that further production cannot take place. 3.8 Further, Rule 10 is silent on the aspect as to who shall abate the duty - whether Department has to grant the abatement by way of refund of the excess duty so paid or assessee can suo moto abate the duty by paying reduced duty on proportionate basis. Thus, it is submitted that the suo moto claiming of abatement by the Appellant in the present case is legal and proper in the absence of any express provision prescribing the procedure or restricting the same. 3.9 It is a settled legal position that suo moto abatement claim under Rule 10 of the CTD Rules is legally correct. For this, reliance is placed on the following authorities: • Trimurti Fragrances Pvt. Ltd. V. CCE, Delhi-III, 2015 (329) E.L.T.175 (TrL - Del.) • Zest Packers Pvt. Ltd v. CCE, Ahmedabad-II, 2015-TIOL-1866-CESTAT-AHM • Maa Vindhyavashini Tobacco Pvt. Ltd. V. CCE, Kanpur, 2017 (4) TMI 1119 -CESTAT ALLAHABAD • Circular No. 331/47/97-CX, dated 30.08.1997 4. The Hon'ble Tribunal in the case of Thakkar Tobacco ....
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.... the aforesaid scenarios. Therefore, it is submitted that the said provision certainly qualifies the method of calculation of duty as prescribed under Rule 7 of the CTD Rules. This legal submission is made in support of the observations made by the Hon'ble Tribunal in the case of Trimurti Fragrances (supra). 4.5 In the present case, the impugned order has not given any finding on the Appellant's contention of applicability of 4th proviso to Rule 9 in the instant case, but has merely confirmed the demand by observing that the Appellant should have paid the entire duty based on deemed production and should not have paid the reduced duty on proportionate basis. In this regard, it is submitted that the Appellant's case for the period from April 2012 to September 2012 falls within the purview of 4th proviso to Rule 9. The same is summarized below in a tabular form: - 4.6 Thus, in view of above, it is submitted that the Appellant was legally correct 'in paying duty on proportionate basis in terms of 4thproviso to Rule 9 and therefore, duty demand confirmed under Months of 2012 Machine No. Commencement of New RSP for the first time during the respective mont....
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.... of these provisions has been well explained in para 9 of the decision of Hon'ble Tribunal in the case of Trimurti Fragrances (supra) where it was held that: • Rule 7 prescribes the formula for calculation of duty by applying the appropriate rate of duty as specified in the Notification No. 42/2008-CE. • Rule 8 specifies as to how the number of operating packing machines is to be determined, as per which the number of operating packing machines in a factory for a month shall be the maximum number of operating packing machines installed on any day during the month. • Though Rule 9 is titled 'Manner of Payment of Duty', however, the 4th proviso thereto is about re-calculation of duty in the circumstances when during a month, the manufacturer either permanently discontinues the manufacture of the goods of existing RSP or commences the manufacture of goods of new RSP. Thus, 4th proviso to Rule 9 qualifies the provisions of Rule 7 and 8. 6.1 It was further held in the said case that if the department's contention is accepted it would make Fourth Proviso to Rule 9 redundant. Thus, it was held that duty on machines installed w.e.f.....
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....lved as the calculation of the duty payable in respect of such machines which were operated for a part of the month whether the duty is payable on pro-rata basis for the number of days in the month during which the machine had functioned or would be payable for the whole month without any abatement has been considered and it has been observed as follows.; "13. In this connection, the only proviso for abatement is mentioned in Rule 10, but for invoking this rule - (a) the entire factory must be closed for a continuous period of 15 days or more; (b) during the period of closure there should not be any manufacturing activity whatsoever and no removal of goods by the manufacturers; and (c) prior intimation, at least three days prior to closure, must be given to jurisdictional Central Excise Officer who shall seal all the packing machines available in the factory in such a manner that the same cannot be operated during the period of closure. In the instant case, it is clear that the entire factory was not closed. A few machines were working and production was on. It is not the case of the assessee-Appellants that entire factory was closed for a continuous period of 15 day....
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....viso, Rule 6 (4), Rule 7, it is evident that the applicable rule in the facts of the present case is Rule 9 which provides for the monthly duty payable on notified goods shall be paid by the 5th day of the same month and an intimation in Form - II shall be filed with the Jurisdictional Authority by 10th of the same month. Further, 4th proviso to Rule 9 provides that in case a manufacturer commences manufacturing of goods of a new retail sale price during the month, the monthly duty shall be recalculated pro-rata on the basis of total number of days in that month and the number of days remaining in that month counting from the date of such commencement and the duty liability for the month shall not be discharged unless the differential duty is paid by the 5th of the following month and in case the amount of duty so re-calculated is less than the duty for the said month, the balance shall be refunded to the manufacturer by the 20th day of the next month, whereas Rule 8 provides in case of addition or installation or removal or un-installation of a packing machine in the factory during the month, the number of operating packing machine for the month shall be taken as the maximum numbe....
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....commences the manufacture of goods of a new RSP. Thus the Fourth Proviso to Rule 9 is in respect of calculation of duty payable for a month and has to be treated as qualifying the provisions of Rule 7 read with Rule 8. Hon'ble Bombay High Court in the case of Shree Satpuda Tapi Parisar Sahkari Sakhar Karkhana Ltd. v. Union of India reported in 2014 (307) E.L.T. 699 (Bom.) in para 13 of its judgment regarding the construction of the proviso has held as under :- "the general rule in construing a provision containing a proviso is to construe them together without making either of them redundant or otiose. Even if enacting part is clear, effort is to be made to give some meaning to the proviso and to justify its necessity. It is also settled preposition of law that the enacting part should be generally given such a construction which would make the exceptions carved out by the proviso necessary and the construction which would make construction unnecessary and redundant should be avoided." 9.1 If the Department's contention is accepted, it would make the Fourth Proviso to Rule 9 redundant, which in view of the above mentioned judgment of Hon'ble Bombay High Court is n....