2014 (5) TMI 1035 - AT - Central Excise

Waiver of pre deposit - Valuation - duty liability under the Pan Masala Packing Machines (Capacity Determination and Collection of Duty) Rules, 2008 - Held that - Appellant is in manufacturing pan masala with or without tobacco and had filed declarations with the authorities as provided for in PMPM Rules. For the period in question, it is on record that the appellant was manufacturing pan masala with or without tobacco having different MRP s like Re. 1.00, Re. 1.50, ₹ 2.00, ₹ 3.00 and ₹ 4.00 and had filed declarations in Forms 1 & 2 under Rules 6 & 9 of PMPM Rules. The lower authorities have come to a conclusion that during this material period, appellant had manufactured pan masala containing tobacco of MRP of ₹ 2.50 and had not declared the same specifically and hence duty liability was sought to be demanded from the appellants, which in our prima facie view, seems to be incorrect - assessee is required to pay the excise duty on a product manufactured of a retail sale price between ₹ 2.00 & ₹ 3.00 as determined by the authorities. Though there is a procedural requirement of filing the manufacturing activity under Forms 1 & 2 it would, in our view may not be of much consequence as the table hereinabove reproduced clearly indicates a range of MRP on which duty liability needs to be discharged. It is undisputed that during the material period appellant had discharged the duty liability as arrived under the PMPM Rules. Prima facie, additional duty demanded from the appellant seems to be unsustainable. - Stay granted.

Summary

Issues:
Demand of central excise duty based on Pan Masala Packing Machines Rules during a specific period.

Analysis:
The case involved a dispute regarding the demand of central excise duty on the appellant for the period of February-March, 2012, under the Pan Masala Packing Machines (Capacity Determination and Collection of Duty) Rules, 2008. The appellant was alleged to have not discharged the correct duty liability during this period. The appellant argued that the duty liability should be based on the MRPs specified in the PMPM Rules and that the deemed production concept should be considered. The department, however, contended that the appellant had intended to clear goods clandestinely by paying less duty.

The Tribunal examined the submissions of both parties and reviewed the records. It was established that the appellant was manufacturing pan masala with or without tobacco and had filed declarations as required by the PMPM Rules. The authorities had concluded that the appellant had not declared the manufacturing of pan masala with an MRP of &8377; 2.50 specifically, leading to a demand for duty. However, the Tribunal found that the duty liability should be determined based on the MRPs specified in the PMPM Rules, irrespective of the specific declarations made by the appellant. The Tribunal highlighted Rule 5 of the PMPM Rules, which outlines the deemed production quantities based on retail sale prices.

The Tribunal observed that the appellant had discharged the duty liability as per the PMPM Rules during the material period. Therefore, the additional duty demanded from the appellant was deemed unsustainable. Consequently, the Tribunal concluded that the appellant had presented a strong prima facie case in their favor. The Tribunal granted the application for the waiver of the pre-deposit of the amounts involved and stayed the recovery until the appeal's disposal.