Excise Duty Leviable on Illicit Manufacture and Clearance of Pan Masala contains Tobacco which commonly known as ‘Gutkha’ u/s 3A of Central Excise Act: CESTAT [Read Order]

The Ahmedabad bench of the Customs, Excise and Service Tax Appellate Tribunal (CESTAT) held that excise duty can be levied on illicit manufacture and clearance of pan masala containing tobacco which was commonly known as ‘Gutkha’ under section 3A of the Central Excise Act,1944. 

Pareshbhai Ramanbhai Amin, the appellant assessee was an individual and the department alleged that the clearance of Pan Masala Packing Machines (Capacity Determination and Collection of Duty) Rules, 2008 from premises of Laxmi Tobacco Company, situated near Bahucharaji Mata Temple, Village Vasna done by the assessee without the payment of duty.

The assessee appealed against the order passed by the adjudicating authority for confirming the excise duty demand of Rs. 2,16,00,000/- with interest under section 11AA of the Central Excise Act and for the imposition of a penalty of Rs. 25,00,000/- under Rule 26 of Central Excise Rules, 2002. 

P. P. Jadeja, the counsel for the assessee contended that the assessee was not a “manufacturer”, who was liable to pay duty with interest and penalty in respect of the two seized machines and the goods seized during the search. 

Tara Prakash, the counsel for the department relied on the decisions made by the lower authorities and contended that the statement of the assessee itself states that the premises in which the goods were seized was owned by the assessee and the assessee was liable to pay the excise duty demand. 

The Bench observed that in the present case two Pouch Packing Machines (Form, Fill, and Seal - FFS) were found installed and in working condition manufacturing notified goods i.e. "Pan Masala Containing Tobacco" falling under tariff 2403 99 90, known as "Gutkha" and illicit manufacturing and clearance of Pan masala containing tobacco commonly known as "Gutkha", attracting levy of Central Excise duty under section 3A of Central Excise Act. 

The two-member bench comprising Ramesh Nair (Judicial) and C L Mahar (Technical) held that the assessee cannot be considered a manufacturer liable to pay excise duty with interest and penalty. 

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