2019 (2) TMI 938 – CESTAT NEW DELHI – TMI – Clandestine manufacture – seal of machinery found to be broken – closure of factory – demand on the ground that the seal having been broken accidently during the period of closure, it is assumed that the said machine was used for production activities – N/N. 42/2008-CE dated 01.07.2008 – Held that:- Revenue in their memo of appeal, apart from reiterating the same allegation as were made in the show cause notice, has not further adduced any evidence to show that the broken seal of the machine has led to the use of the machine and the machine has produced Gutkha pouches on the same. The Commissioner has given a detailed finding and has also taken into account the report of the Deputy Commissioner indicating absence of any mala fide on the part of the assessee. Such report of the Deputy Commissioner is also based upon the scrutiny of various relevant documents and has not been controverted and rebutted by the Revenue.
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Appeal dismissed –
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pouch and one Pouch Packing Machine of MRP ₹ 5.00 per pouch. On the Noticee s request dated 28.04.2011, three machines out of these ten machines of MRP ₹ 1.50 per pouch were sealed on 01.05.2011 and one pouch packing machine of MRP ₹ 5.00 was sealed on 01.05.2011 on Noticee s request dated 27.05.2011. Thereby seven pouch packing machines of MRP ₹ 1.50 per pouch were operative on 01.05.2011. 4. On the Noticee s request letter dated 13.06.2011, the said seven pouch packing machines of MRP ₹ 1.50 per pouch were also sealed in the midnight of 15.06.2011 – 16.06.2011. As a result, all the 10 pouch packing machines of MRP ₹ 1.50 per pouch were sealed and non-operative in the factory premises of the Noticee w.e.f. 16.06.2011 and one pouch packing machine of MRP ₹ 5.00 per pouch w.e.f. 01.06.2011. 5. Further, the Noticee vide letter dated 08.07.2011 had requested for de-sealing of Five packing machines of MRP ₹ 1.50 per pouch, which were de-seal
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ey were free to manufacture/clear the said goods at any time on their own. 8. Thus a period of 25 days is calculated on account of removal of seal by the Noticee in contravention of Central Excise Rules & Pan Masala Packing Machines (Capacity Determination & Collection of Duty) Rules, 2008 on the said machines. 9. The levy of Central Excise Duty on Pan Masala containing Tobacco commonly known as Gutkha falling under Tariff item 24039990 of the Central Excise Tariff Act, 1985, under Notification No.42/2008-CE dated 01.07.2008 per pouch packing machine of MRP ₹ 5.00 per pouch is levied at ₹ 59,00,000/- per month. The breach of law by the Noticee appears to be w.e.f. 16.06.2011 to 10.07.2011, i.e. 25 days, Central Excise Duty recoverable for 25 days comes to ₹ 49,16,667/-. As the Noticee was required to pay the duty short paid by them but they did not discharge their liability. The same is recoverable from them under Section 11A of the Central Excise Act, 1944 re
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Packing Machines (Capacity Determination & Collection of Duty) Rules, 2008 should not be imposed. 11. During the course of adjudication, the respondents took a categorical stands that as their factory was closed from 16/06/2011 to 30/06/2011, lot of dust had accumulated on the machines. They directed their employees to clean the factory as also to remove dust from the machine and it seems that during the course of cleaning of the machines, the seal was detached and fell down. The seal was found immediately next to the machine and the machine was admittedly unplugged with the electrical connection, thus establishing that the same was not in a working condition. Further they contended that no raw material or the final product was found near the machine thus establishing that the same was not used during the period of closure. They also submitted that an enquiry was undertaken against them by the Deputy Commissioner, who had taken into account the entire evidence on record including
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f the goods, mere fact of the seal having been broken accidently during the period of closure cannot lead to the fact that the said machine was used for production activities. He accordingly dropped the proceedings. 13. Revenue in their memo of appeal, apart from reiterating the same allegation as were made in the show cause notice, has not further adduced any evidence to show that the broken seal of the machine has led to the use of the machine and the machine has produced Gutkha pouches on the same. The Commissioner has given a detailed finding and has also taken into account the report of the Deputy Commissioner indicating absence of any mala fide on the part of the assessee. Such report of the Deputy Commissioner is also based upon the scrutiny of various relevant documents and has not been controverted and rebutted by the Revenue. As such, I find no reasons to interfere in the impugned order of Commissioner. Revenue s appeal is accordingly rejected. (Pronounced in Open Court on 15
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