2015 (4) TMI 1061 - AT - Central Excise

Manufacturing of Gutkha and pan masala - The Department invoking the first proviso to Rule 8 of the PMPM Rules has treated each machine as 2 packing machines and has demanded duty on this basis. - Held that - 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.

Summary

Issues involved: Interpretation of Pan masala Packing Machine Rules, duty liability calculation, applicability of proviso to Rule 8, penalty imposition, stay order validity, disposal of appeal within stipulated period.

Interpretation of Pan masala Packing Machine Rules: The appellant, manufacturers of Pan masala and Gutkha, were discharging duty liability based on the Pan masala Packing Machine Rules. The dispute arose when the Department treated each machine as 2 packing machines due to the appellant's use of machines for different-priced products during the same month. The Commissioner confirmed a duty demand against the appellant based on this interpretation. The proviso to Rule 8 states that starting manufacturing of a new retail sale price (RSP) during a month on an existing machine is deemed an addition in the number of operating packing machines for that month.

Penalty Imposition: The Commissioner imposed a penalty on the appellant under Rule 17 of the PMPM Rules read with Rule 25 of the Central Excise Rules, 2002. However, the Tribunal found in favor of the appellant based on a previous judgment in the case of Trimurti Fragrance Pvt. Ltd. vs. CCE, Kanpur. The Tribunal set aside the impugned order and allowed the appeal, aligning with the judgment in the aforementioned case.

Stay Order Validity and Appeal Disposal: Initially, the Tribunal granted unconditional waiver from pre-deposit following a judgment in another case. The Department filed an appeal against this stay order, arguing that the Tribunal had no power to grant stay beyond 365 days. The High Court directed the Tribunal to dispose of the appeal within a stipulated period of 6 months. Consequently, the current appeal was heard and decided in light of the previous judgment in Trimurti Fragrance Pvt. Ltd. case, leading to the setting aside of the impugned order and allowing the appeal.

Conclusion: The Tribunal, after considering the interpretation of the Pan masala Packing Machine Rules, penalty imposition, and the validity of the stay order, allowed the appeal in favor of the appellant based on a previous judgment. The decision aligned with the Tribunal's precedent, demonstrating consistency in legal interpretation and application.