Relief To Gutka Manufacturer: Full Excise duty Can’t Be Demanded For Period When Machines Were Not In Operation: CESTAT

Date:

In a major relief to Gutka Manufacturer, the Ahmedabad Bench of Customs, Excise and Service Tax Appellate Tribunal (CESTAT) has held that full excise duty cannot be demanded for the period when the machines were not in operation.

The bench of Dr. Ajaya Krishna Vishvesha (Judicial Member) and C.L. Mahar (Technical Member) has observed that the essence of the Pan Masala Packing Machines (Capacity Determination and Collection of Duty) Rules, 2008 is that the manufacturer has to pay duty for the operational days of the machines and since the appellant has deposited the proportionate amount of duty of working days of the machines, we find that Central Excise duty cannot be demanded for the period when the machines remained non-operational.

The appellant/assessee is engaged in the manufacture of Pan Masala and Pan Masala Containing tobacco (Gutka) having retail sale price of Rs. 1.00 and Rs. 1.50 per pouch falling under Chapter sub- Heading No. 21069020 & 24039990 of the Central Excise Tariff Act, 1985. It has been mentioned that the appellant has been working under Pan Masala Packing Machines (Capacity Determination and Collection of Duty) Rules, 2008.

The appellant was issued a show cause notice dated 29.11.2011 wherein it was alleged that appellant have made payment of Central Excise duty on proportionate basis for the days when the machines remained in operation for manufacturing of Pan Masala and Pan Masala (Gutka) and the appellant have availed suo-moto abatement of duty for the days when the machines were sealed by the Department and not in operation. 

The show cause notice has demanded Central Excise duty of Pan Masala for the whole month even when the machines remained non-operational. The show cause notice was issued demanding Central Excise duty of Rs. 1,46,01,076/- along with penalty provisions etc. 

The adjudicating authority has partly dropped the demand and confirmed the balance demand of duty under Section 11A of Central Excise Act, 1944.

The tribunal held that nowhere in the impugned order-in-original it has been mentioned by the adjudicating authority that appellant has not followed the laid-down procedure in the Pan Masala Packing Machines (Capacity Determination and Collection of Duty) Rules, 2008.

The CESTAT held that Whenever the appellant wanted to stop working of a number of machines, due intimation has been given to the Department and the machines were sealed by the jurisdictional Superintendent of the range and whenever the machines were made operational, the appellant have informed the department and they have started operating the machine only after the officers have de-sealed the machines. 

Read More: No Evidence Against Customs Broker To Prove Misdeclaration Except Retracted Statement: CESTAT Quashes Revocation Of License

Case Details

Case Title: Maruti Tabacco Products P Limited Versus Commissioner of Central Excise & ST, Vadodara

Case No.: Excise Appeal No. 10032 of 2013-DB

Date:  24.01.2025

Counsel For Appellant: Ankur Upadhyay

Counsel For Respondent: Rajesh R Kurup

Mariya Paliwala
Mariya Paliwalahttps://jurishour.in/
Mariya is the Senior Editor at JurisHour. She has 5+ years of experience on covering tax litigation stories from the Supreme Court, High Courts and various tribunals including CESTAT, ITAT, NCLAT, NCLT, etc. Mariya graduated from MLSU Law College, Udaipur (Raj.) with B.A.LL.B. and also holds an LL.M. She started as a freelance tax reporter in the leading online legal news companies like LiveLaw & Taxscan.

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