The duty for the period prior to the amendment was required to be computed based on the rules in force at the time of the search, and not retrospectively.

JUDGMENT

Vibhu Bakhru, J. (Oral)

CM No.24622/2023 (for exemption)

1. Exemption is allowed, subject to all just exceptions.

2. The application is disposed of.

CM No.24623/2023 (for condonation of delay)

3. For the reasons stated in the application, delay in filing the present appeal is condoned.

4. The application is disposed of.

SERTA 3/2023

5. The Revenue has filed the present appeal under Section 35G of the Central Excise Act, 1944 impugning the final order dated 29.09.2022 (hereafter `the impugned order') passed by the Customs, Excise & Service Tax Appellate Tribunal (hereafter `the Tribunal').

6. The controversy in the present appeal relates to the quantum of duty payable by the respondents. The Tribunal upheld the Order-in-Original dated 30.11.2017 passed by the Principal Commissioner Central Tax (Goods & Services), Delhi (hereafter `the Adjudicating Authority') insofar as the computation of duty is concerned. According to the Adjudicating Authority as well as the Tribunal, the duty payable by the respondents, in the facts of the present case, for the months of July and August, 2008 was required to be computed on the basis of the Pan Masala Packing Machines (Capacity Determination and Collection of Duty) Rules, 2008 (hereafter `the PMPM Rules') as in force, prior to the Pan Masala Packing Machines (Capacity Determination and Collection of Duty) Second Amendment Rules, 2008 (hereafter `the Second Amendment Rules') coming into force. The Adjudicating Authority as well as the Tribunal had reasoned that the premises of respondent no.1 was searched on 04.08.2008, and the Second Amendment Rules came into force on 20.10.2008.

Factual Context

7. Respondent no. 1 (M/s OM Fragrances) is a firm enagaged in the business of manufacturing and clearing of gutkha under the brand name "India Gold", for sale in the domestic market. Respondent no. 2 is one of its constituent partners.

8. Upon receiving information that the respondents were clandestinely removing goods without obtaining the requisite Central Excise Registration; without accounting for the goods manufactured; and without paying the appropriate Central Excise Duty, a search was conducted at the premises of respondent no.1- House No. 786, opposite Kalandeshwar Shiv Temple, Village Burari on 04.08.2008. During the search, the following items were found:

(a) Five pouch packing machines found in working condition. Besides the same, two more dismantled pouch packing machines were found and one mixer machine was also found.

(b) The finished goods seized from the factory were valued at Rs.3,85,000/- (which also includes the gutkha pouches having a maximum retail price (MRP) of Rs.1/- manufactured by the respondents).

9. The machinery available at the premises were valued at Rs.3,75,000/-. The same were seized and handed over to respondent no.2 on superdignama dated 04.08.2008. The factory premises was sealed thereafter.

10. Statements of respondent no.2 and one Sh. Rajeev Gupta (Supervisor with respondent no.1) were recorded on 04.08.2008 and 05.08.2008 under Section 14 of the Central Excise Act, 1944. According to the appellant, they admitted the facts as mentioned in the panchnama dated 04.08.2008. They also admitted that the respondents were running the factory at Burari in night shifts for two-three days in a week since December, 2007.

11. Thereafter, under cover of a letter dated 03.09.2008, respondent no.2 forwarded two demand drafts aggregating a sum of Rs.55,00,000/- pending quantification of the dues. These were deposited on 05.09.2008. Thereafter, respondent no.2 also made a payment of Rs.20,00,000/-. Thus, in aggregate the respondents paid a sum of Rs.75,00,000/-.

12. A show cause notice dated 29.01.2009 was issued proposing confiscation of the seized goods and payment of central excise duty of Rs.96,47,361/- under the Central Excise Act, 1944. In addition, the respondents and Sh. Rajeev Gupta were called upon to show cause as to why a penalty under Rule 26 of the Cen