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2015 (5) TMI 331 - AT - Central ExciseWaiver of pre deposit - manufacturers of Pan Masala and Gutkha - interpretation of the first proviso to Rule 8 of the PMPM Rules - Held that - Rule becomes applicable when during a per month, a manufacturer of Gutkha/ Pan Masala commences the manufacture of pouches of a new RSP on an existing machine by which he was earlier manufacturing pouches of a different RSP. The point of dispute is as to what is the new RSP and whether a RSP different from the existing RSP, but of the same RSP slab of the different RSP slabs mentioned in Rule 5, can be treated as a new RSP . - new RSP referred in first proviso to Rule 8 would be the RSP of a different slab, and not the RSP of the same slab. We are, therefore, of the prima facie view that the impugned order which treats the RSP same slab i.e. ₹ 50 Paisa per pouch and ₹ 1 per pouch as different RSPs is not correct. We find that the same view has been taken by the Tribunal in the cases of Phoolchand sales corporation vs. CCE Lucknow (2012 (11) TMI 476 - CESTAT, NEW DELHI) and M/s Kanti Chemicals vs CCE Kanpur (2015 (4) TMI 534 - CESTAT NEW DELHI). In view of this the requirement of pre-deposit of the duty demand interest there on and penalty is waived for hearing of the appeal and recovery thereof is stayed - Stay granted.
Issues:
Interpretation of the first proviso to Rule 8 of the Pan Masala Packing Machine (PMPM) Rules, 2008 regarding the deemed addition of operating packing machines based on the retail sale price (RSP) per pouch manufactured. Analysis: The case involved manufacturers of Pan Masala and Gutkha who discharged duty liability under the PMPM Rules, 2008. The dispute centered around the application of the first proviso to Rule 8 of the PMPM Rules, which deems the addition of operating packing machines when a manufacturer commences manufacturing goods of a new RSP during a month on an existing machine. The appellant used the same machines for manufacturing pouches of RSP 50 Paise and one Rupee during specific months. The department demanded duty based on treating each machine as two operating machines, resulting in a duty demand of Rs. 50 lakh and penalties imposed by the Commissioner. During the hearing, the appellant cited Tribunal orders in similar cases where the first proviso was not applied, leading to the grant of unconditional stay. The appellant argued for the waiver of pre-deposit of duty demand, interest, and penalties pending the appeal. The Departmental Representative opposed the stay application, supporting the findings of the Commissioner's order. The Tribunal analyzed Rule 8 of the PMPM Rules, emphasizing that the rule applies when a manufacturer starts producing pouches of a new RSP on an existing machine that previously manufactured pouches of a different RSP. The key issue was determining what constitutes a "new RSP" and whether a different RSP within the same RSP slab could be considered new. The duty on Pan Masala and Gutkha is based on deemed manufacture per operating machine per month, as specified in Rule 5 for different RSP slabs. The Tribunal concluded that treating different RSPs within the same slab as new RSPs would result in charging duty multiple times for the same production, contrary to the provisions of the Rules. It held that the new RSP referred to in the first proviso should be from a different slab, not within the same slab. The Tribunal found support for this interpretation in previous Tribunal cases and granted the stay application, waiving the pre-deposit of duty demand, interest, and penalties pending the appeal. In summary, the Tribunal's decision clarified the interpretation of the first proviso to Rule 8 of the PMPM Rules, ensuring that duty is levied correctly based on the deemed manufacture of pouches per machine per month, considering the retail sale price slabs specified in the Rules.
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