TaxTMI 
TaxTMI 
2022 (7) TMI 1062
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....nder: [2] The petitioner is a company incorporated and registered under the Companies Act, 1956 (now the Companies Act, 2013). The petitioner is engaged in the manufacture and sale of cigarettes in its factory established at 14-B, Sector F, Industrial Area, Sanawer Road, Indore. Cigarettes are covered under the Central Excise Act, 1944, hence the petitioner has obtained the registration under the Act. After the introduction of GST, the petitioner became liable to levy of Central Excise as also levy of Goods and Service Tax as Cigarettes is specified in HSN Code Heading 2402 and sub-heading 2402 20. So far as Central Excise is concerned, the levy continues under the Central Excise Act, 1944 and the Rules made thereunder and so far as GST is concerned the levy is governed under the Central Goods & Service Tax Act, 2017 and M.P. goods and Service Tax Act, 2017. [3] Section 3 of the Central Excise Act, 1944 deals with the levy of duty on goods which are produced or manufactured. Rule 94 of the Central Excise Rules, 1944 mandates the manufacturer of tobacco products to maintain a record of production and dispatch in the manner specified therein. Rule 6 of CE Rules, 2017 mandates that ....
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....cising power under Section 67(2) of the said Act. The authorities have seized computer hard discs, books, documents and two generators (DG) sets. According to the petitioner, the authorities conducting the search have not only sealed the generator sets but cigarette manufacturing machines under the provisions of Trade Notice No.2/15 dated 04.02.2015 only on the ground that the non-functioning of the machine for more than 24 hours and were not giving production as per its capacity. [8] After the search was over, vide letter dated 12.10.2020 the petitioner requested the Assistant Commissioner to de-seal the machine and DG sets. A reply was given to the petitioner on 06.11.2020 that the directions of the higher authorities are awaited. Thereafter vide letters dated 25.11.2020 and 26.11.2020 the Superintendent and Assistant Commissioner demanded some details as a condition before de-sealing. According to the petitioner, all the details were already on record, which has been seized by the respondent. Despite furnishing all the details, the respondents have not de-sealed the machines and DG sets due to which the petitioner was unable to start the production to date. [9] Vide impugned n....
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....he respondents and permission to carry out its manufacturing business in the usual manner in terms of section 3 of Central Excise Act read with Rule 6 and 11 of Central Excise Rules 2017. It is further submitted by the learned counsel that the excise duty is always levied on the quantity of the goods manufactured and does not depend on the production capacity of the machine. Tax is levied in terms of Rule 6,8 and 11 when a manufacturer of cigarettes takes his goods out of the factory. It is also a clear and accepted position between the parties that Rule 6 and 11 require every single input to be cross verified and acknowledged by the Inspector of Central Excise or Superintendent of Central Excise and no single cigarette which is ready for sale can be taken out of the factory unless the tax on it is paid and audit is cross verified and certified by the Superintendent under Rule 11 of the Rules. Finally learned counsel submitted that the the action of the respondents to keep the petitioner's machines in the factory sealed on the ground of non-compliance with the Trade Notice dated 18.01.2021 is illegal and violative of the petitioner's fundamental rights under Article 14, 19(....
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....mitted by the petitioner was incorrect on the face of the record, it became pertinent for the department to get it verified by the team of experts, therefore, at that time the request for de-sealing the machines was declined. [16] The respondents have supported the validity of Trade Notice No.04/2021 dated 18.01.2021 as it does not travel beyond the scope and power of delegated authority of the commissioner given under Rule 13 of CE 2017. The respondents have also relied on sections 37 (2) (v) of the Central Excise Act,2017 which authorise them to regulate the production or any process of the production or manufacture, storage, or sale for the purpose of collection of the proper duty imposed under the Act. Submissions of respondents' counsel [17] Shri Prasanna Prasad learned counsel appearing on behalf of the respondents has argued that the manufacturing and sale of cigarettes is a sensitive commodity under the Central Excise Act and GST Act. It also attracts National Calamity Contingent Duty (NCCD). The petitioner has a checkered history as one case of clandestine manufacturing and clearance of cigarettes was registered in the year 2011-12, wherein duty demand of Rs. 28,39,43,1....
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....depriving the petitioner to start the business? 19. According to the respondents, a search was conducted and machine and DG sets were sealed under the provisions of Trade Notice No.02/2015 dated 04.02.2015 which was under operation/ effect at the relevant. Clause -C of the Trade Notice is relevant which provides that the seal shall be removed by the authorised officer when the production is scheduled to start on the next working shift/day. The relevant clause -C is reproduced below: C. Procedure for Non-working/Partially working machine. 4.1 Where the unit is operating at a capacity lower than 50% of the total machine hours available for the machines installed the machine will be sealed after the production is over by the Inspector or any other officer authorized by the Commissioner. This seal shall be removed by the authorised officer scheduled when the production is scheduled to start on the next working shift/day. It is clarified that the machines should be sealed in such a manner that no commercial production is possible without removing such seal. 4.2 In case the unit does not propose to operate any of the machines for the day or for any specified/expected period the sa....
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....o time. The petitioner is aggrieved by only Trade Notice dated 18.01.2021 issued by the Office of Commissioner CGST & Central Excise. Rule 34 of the Central Excise Rules, 2017 gives power to Board or the Principal Chief Commissioner or Chief Commissioner, to issue written instructions for any incidental or supplemental matters, consistent with the provisions of the Act and rules. Therefore, the Excise authority gets jurisdiction to issue Trade Notices under the Act and rules but the only rider is that such written instructions in the Trade Notice should be consistent with the act and provision of the rules. 21. Now the next grievance of the petitioner is about clause 6.3 which is produced below:- '' Whether any machine is operating at a capacity lower than 50% of total machine hours in a shift available or less than 50% of the declared capacity for a machine installed, the machine will be sealed after the production record is submitted on the next day. The de-sealing of the said machines will be done only after the written undertaking by the manufacturer that they will utilize at least 50% of the total machine hours in a shift and the declared capacity of the machine. Fu....
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.... machine then the respondents cannot compel any manufacturer to give a declaration or run the factory up to its 50% capacity. The Excise is levied only when the finished goods are removed from the factory and as per the provisions of the Central Excise Act, it is mandatory for manufacturers to maintain the record and issue a get pass. The Excise officer is posted there 24x7 hours to check the production and accordingly, charged the excise duty, therefore, no purpose would be served by keeping the record or insisting the manufacturer to declare the capacity of the machine. It is the responsibility of the Excise Officer to watch 24x7 hrs and check the capacity of production in the factory before removing the goods. 25. So far as W.P. No.23624/2021 is concerned, the petitioner has challenged the action of the respondents by which they called the Chartered Engineer to assess the capacity of the machine. In view of the above discussion, nothing is required to adjudicate the said issue. Even otherwise, Section 145 of the GST Act gives the authority to seek an opinion from an expert, hence this writ petition is devoid of substance hence dismissed. 26. Before parting we would like to ob....