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2015 (3) TMI 1130 - AT - Central ExciseRecovery of duty - Rule 8 of the PMPM Rules - as per revenue the appellant have used the machines installed for the manufacture of the pouches of MRP of 50 Paisa also in addition to the pouches of MRP of Rs. One, it would be treated as addition of new machine - required to pay duty on 49 machines, 47 machines 47 machines, 61 machines and 57 machines respectively at the rate applicable for the MRP of 50 Paisa per pouch, in addition to the duty already paid by them in respect of the same number of machines at the rate applicable for the MRP of Rs. One. - Held that - As in terms of the retrospective amendment effective from 13th April, 2010, made by section 101 of the Finance Act, 2014, when a manufacturer in a particular month manufacturers Gutkha of different RSPs on the same machines, his duty liability in respect of that machine would be at the rate applicable to the highest RSP. In our view, this retrospective amendemnt is in accordance with the 6th proviso to Rule 9 and also in accordance with the provisions of Rule 5 and this retrospective amendment to Rule 8 of PMPM Rules, shows that it was not the intention of the Government that in a case where in a month a particular machine is used to produce Gutkha pouches of more than one RSP, each RSP is to be treated as separate machine for the purpose of charging duty, but the intention was to charge duty inasmuch as situation at the rate applicable to the highest RSP. For this reason also, there is no reason for interpreting the first proviso to Rule 8 during the period prior to 13.04.2010 in a manner which would result in levy of duty on the quantity which is more than the deemed production per machine per month as specified in rule 5 as the retrospective amendment to Rule 8 of the PMPM Rules w.e.f. 13.04.2010 shows that the intention of the Government was to levy duty at the rate applicable to highest RSP on a machine during a particular month when during that month, on that machine, pouches of different RSPs had been produced. Moreover, it is well settled principle of the interpretation of the statute that different provisions of a statute must be construed harmoniously and, therefore, in this case, 1st proviso to Rule 8 of the PMPM Rules cannot be interprested so as to result in levy of duty on the quantity which is more than the deemed production per machine per month as specified in Rule 5. When for the purpose of rule 5, in case of a packing machine manufacturing Gutkha pouches of RSP of ₹ 1, the RSP of ₹ 0.50 piece is not a new RSP, for the purpose of First Proviso to Rule 8, it cannot be treated as new RSP. - Decided in favour of assessee.
Issues Involved:
1. Interpretation of "new retail sale price" (RSP) under Rule 8 of the PMPM Rules. 2. Application of the Sixth Proviso to Rule 9 of the PMPM Rules. 3. Penalty imposition under Rule 17 of the PMPM Rules read with Rule 25 of the Central Excise Rules, 2002. 4. Retrospective amendment to Rule 8 of the PMPM Rules by Section 101 of the Finance Act, 2014. Issue-wise Detailed Analysis: 1. Interpretation of "new retail sale price" (RSP) under Rule 8 of the PMPM Rules: The core dispute was whether the term "new retail sale price" (RSP) in the first proviso to Rule 8 should be interpreted as any different RSP or only a different RSP slab as per Rule 5. The appellant argued that "new RSP" should be understood in the context of Rule 5, which specifies deemed production per machine per month based on various RSP slabs. Therefore, an RSP of Rs. 0.50 should not be considered new if the machine was already producing pouches with an RSP of Rs. 1, as both fall under the same RSP slab ("upto Rs. 1"). The Tribunal agreed with this interpretation, stating that the first proviso to Rule 8 should not result in a duty levy on deemed production exceeding the production specified in Rule 5. 2. Application of the Sixth Proviso to Rule 9 of the PMPM Rules: The Sixth Proviso to Rule 9 states that if a manufacturer produces goods of an undeclared RSP, they must pay duty at the rate applicable to the highest RSP for all machines operated during that period. The appellant had declared the manufacture of Gutkha with an RSP of Rs. 1 but also produced pouches with an RSP of Rs. 0.50. Since the appellant had already paid duty at the rate applicable to Rs. 1, the Tribunal found no additional duty liability under the Sixth Proviso to Rule 9. 3. Penalty imposition under Rule 17 of the PMPM Rules read with Rule 25 of the Central Excise Rules, 2002: The appellant contested the imposition of penalties, arguing that mens rea (intent to evade duty) was absent and that all facts were declared in their ER-1 returns. The Tribunal noted that penalties under Rule 17 are subject to Section 11AC of the Central Excise Act, which requires an element of mens rea. Given the appellant's compliance in filing returns and lack of intent to evade duty, the Tribunal found that penalty imposition was not justified. 4. Retrospective amendment to Rule 8 of the PMPM Rules by Section 101 of the Finance Act, 2014: The retrospective amendment clarified that if a machine produces pouches of different RSPs during a month, the duty applicable to the highest RSP should be paid for the entire month. This amendment aligned with the Sixth Proviso to Rule 9 and confirmed that the intention was not to treat each RSP as a separate machine for duty purposes. The Tribunal concluded that the amendment supported their interpretation that the first proviso to Rule 8 should not result in a duty levy exceeding the deemed production specified in Rule 5. Conclusion: The Tribunal set aside the impugned order, agreeing with the appellant's interpretation of "new retail sale price" and the application of the Sixth Proviso to Rule 9. The retrospective amendment to Rule 8 further supported the appellant's case. Consequently, the appeal was allowed, and the penalties were deemed unjustified.
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