Full Excise Duty not Demandable for Period of Non Operation of Machines: CESTAT rules in favour of Gutka Manufacturer [Read Order]
The tribunal found that the adjudicating authority did not state in the contested order-in-original that the appellant had not adhered to the process outlined in the Pan Masala Packing Machines (Capacity Determination and Collection of Duty) Rules, 2008
![Full Excise Duty not Demandable for Period of Non Operation of Machines: CESTAT rules in favour of Gutka Manufacturer [Read Order]](https://www.taxscan.in/wp-content/uploads/2025/01/CESTAT-CESTAT-Ahmedabad-Gutka-Manufacturer-Excise-Duty-Non-Operation-of-Machines-taxscan.jpg "Full Excise Duty not Demandable for Period of Non Operation of Machines: CESTAT rules in favour of Gutka Manufacturer [Read Order]")
In a ruling in favour of 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. Under Chapter sub-Hearing Nos. 21069020 & 24039990 of the Central Excise Tariff Act, 1985, the appellant/assessee, Maruti Tabacco Products P...
In a ruling in favour of 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.
Under Chapter sub-Hearing Nos. 21069020 & 24039990 of the Central Excise Tariff Act, 1985, the appellant/assessee, Maruti Tabacco Products P Limited, manufactures Pan Masala and Pan Masala Containing Tobacco (Gutka) at retail prices of Rs. 1.00 and Rs. 1.50 per pouch. According to the Pan Masala Packing Machines (Capacity Determination and Collection of Duty) Rules, 2008, the appellant has been employed.
A show-cause notice was sent to the appellant on November 29, 2011, alleging that the appellant had paid Central Excise duty proportionately for the days that the machines used to make Pan Masala and Pan Masala (Gutka) were in operation and that the appellant had taken advantage of a suo-moto abatement of duty for the days that the Department had sealed the machines and they were not in use.
Even though the machines were still not working, the show cause notice requested that Pan Masala pay Central Excise duty for the entire month. A show-cause letter was sent out, requesting a Central Excise charge of Rs. 1,46,01,076 in addition to other penalties. In accordance with Section 11A of the Central Excise Act of 1944, the adjudicating authority has partially withdrawn the claim and verified the remaining duty demand.
The basic idea behind the Pan Masala Packing Machines (Capacity Determination and Collection of Duty) Rules, 2008, according to the two-member bench of Dr. Ajaya Krishna Vishvesha (Judicial Member) and C.L. Mahar (Technical Member), is that the manufacturer must pay duty for the machines' operating days. Since the appellant has deposited the appropriate amount of duty for the machines' working days, we find that Central Excise duty cannot be demanded for the time that the machines were not in operation.
Read More:Confiscation of unaccounted Raw Material and Clandestine of Gutka: CESTAT upholds Penalty
The tribunal found that the adjudicating authority did not state in the contested order-in-original that the appellant had not adhered to the process outlined in the Pan Masala Packing Machines (Capacity Determination and Collection of Duty) Rules, 2008.
According to the CESTAT, the appellant gave the Department adequate notice whenever they wished to stop a number of machines from operating, and the jurisdictional superintendent of the range sealed the machines. The appellant then notified the department when the machines were made operational, and they only began operating the machines after the officers had de-sealed them.
To Read the full text of the Order CLICK HERE
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