Order date – 29 September 2022

Facts – 

• The Respondent, M/s. OM Fragrances, manufactured and cleared Gutkha under the brand name “India Gold” for sale in the domestic market. 
• The department believed that the respondent was resorting to clandestine clearance of Gutkha without taking Central Excise Registration. Accordingly, a show cause notice dated 29.01.2009 was issued.
• Earlier, the Commissioner by order dated 23.04.2010 had confirmed the duty demand of Rs. 96,47,361/- with equivalent penalty and personal penalty of Rs. 25 lacs and Rs. 10 lacs upon Sumit Agarwal and Rajeev Gupta respectively. 
• Notification No. 45/2008-C.E. dated 20.10.2008, the 2008 Rules were amended by “Pan Masala Packing Machines (Capacity Determination And Collection of Duty) Second Amendment Rules, 2008”. The amended Rules came into force on 20.10.2008.
• The search was conducted on 04.08.2008. At that time the unamended rule 17(2), which had come into force on 01.07.20008, was operating.
• The appellant authorities held that duty could not have been demanded for the month of July and August 2008 at the rate of Rs. 12.50/- lakhs per machine per month and accordingly due to, the Commissioner dropped the demand for the said period.
• Aggrieved, the department filed an appeal.

Issue – 

• Whether the demand of excise for the notification came after the disputed period is sustainable?

Order – 

• The Tribunal observed that at the time when the search was conducted on 04.08.2008, rule 17(2) had not been amended and the amended rule 17(2) cannot impose duty at a higher rate with retrospective effect.
• The Tribunal relied on the Supreme Court case of Indian Tobacco Association and made it clear that in such a situation the amendment would not be retrospective since no substantive right had been taken away nor any penal consequences had been imposed and only an obvious mistake was sought to be removed. 
• In the present case, if the contention of learned authorised representative appearing for the department is accepted, the respondent would be subjected to higher rate of duty then what was prevailing at that time the search was conducted.
• Since no submission was made by appellant regarding that part of the order by which the Principal Commissioner refrained from imposing penalty on respondent as penalty had already been imposed upon M/s. OM Fragrances.
• Therefore, no merit in the two appeals filed by the Department was found and were dismissed.