The Mumbai Bench of the Customs, Excise and Service Tax Appellate Tribunal (CESTAT), ruled that excise duty is not leviable on mere existence of the packing machine in the factory, thereby granting relief to Godfrey Philips India Ltd, the appellant.
The appellant, Godfrey Philips, is the holder of Central Excise Registration for manufacture of chewing tobacco without lime tube, the excise duty on which is charged on the basis of capacity of production and the same is governed by the Chewing Tobacco and Unmanufactured Tobacco Packing Machines (Capacity Determination and Collection of Duty) Rules, 2010. In compliance with the said Rules, the appellant requested the Range Superintendent “to seal/uninstall the machine no.1 on closing hours of 29.02.12”.
In the panchnama, the Superintendent, Central Excise mentioned about the machine SL110 stating that the same is covered with plastic sheets and electric supply is not connected to the same and that the sealant portion of the machine stands sealed with button seal. He further recorded that there is no activity of packing of chewing tobacco going on at the moment.
The counsel for the appellant submitted that declaration in Form-1, in accordance with Rule 6 of the Chewing Tobacco & Unmanufactured Tobacco Packing Machines (Capacity Determination and Collection of Duty) Rules, 2010, was filed by them on 23.10.2012 whereas the order approving the said declaration (with modification) was issued on 4.12.2012 and communicated to them only on 17.12.2012 which is much beyond the statutory time limit prescribed by the Rules, 2010.
It was also submitted that under the Rules, 2010 the adjudicating authority was only required to determine the annual capacity of production, however, the said authority also determined the monthly duty liability which is beyond his jurisdiction and in support of his submission, the counsel placed reliance on the decision of the Tribunal in Appellant’s own case in the matter of Godfrey Phillips India Ltd. vs. CCE.
A Two-Member Bench comprising C J Mathew, Member (Technical) and Ajay Sharma, Member (Judicial) observed that “Merely because the sealed/uninstalled packing machine is available in the factory premises is not sufficient to saddle the manufacturer with the duty liability except if it falls under Rule 18 (2) ibid which provides for Penalty for contravention etc.”
“Although the authorities below expect appellant to ensure compliance regarding uninstallation and removal of the machine from the factory as per rule 6(5) ibid but at the same time, they failed to notice the noncompliance from their own officials who, as per the letter dated 27.2.2012 of the appellant, were under obligation to seal/uninstall and thereafter to ensure the removal of machine No.1 from the factory premises” the Bench noted.
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