2017 (7) TMI 1119 - AT - Central Excise

Abatement of duty - Rule 10 of the PMPM Rules 2008 - the appellant was required to pay duty as if he was manufacturing the notified goods from three separate machines whereas admittedly all the three RSP-different products were being manufactured from the same one packing machine. Held that - in view of the amendment by way of substitution of the first proviso to Rule 8 of PMPM Rules 2008 which is retrospective in nature we hold that the appellant is required to pay duty based on the notified products having the highest RSP/MSP - In view of the admitted fact that the appellant have paid the duty on the basis of MRP/RSP per pouch which is highest of the notified goods we hold that the demand on this score 1, 25, 29, 839/- under Section 11A(2) of the Central Excise Act 1944 is not tenable and accordingly the same is set aside along with the penalty imposed of 1, 25, 000/- under Rule 17 of the Pan Masala Packing Machine (Capacity Determination & Collection of duty) Rules 2008. Allowance of abatement - Held that - only allegation of the Revenue for rejection of abatement is that the amount of admissible abatement have not been quantified by the Department and secondly the appellant had cleared Pan Samagri (a non-notified goods) during the period of closure and as such was not entitled for the abetment - Held that - the assessee is entitled to abatement during the period of closure if they have removed or cleared any non-notified goods during the period of closure - appellant is entitled to abatement for the period under dispute. Appeal allowed - decided in favor of appellant.

Summary

Issues Involved:
1. Demand of duty under Section 11A(2) of the Central Excise Act, 1944.
2. Imposition of penalty under Rule 17 of the Pan Masala Packing Machine (Capacity Determination & Collection of duty) Rules, 2008.
3. Abatement of duty under Rule 10 of the PMPM Rules, 2008.

Detailed Analysis:

1. Demand of Duty under Section 11A(2) of the Central Excise Act, 1944:
The appellant, a manufacturer of Pan Masala and Gutkha, was alleged to have short-paid duty amounting to ?1,25,29,839/- for the period from August 2008 to January 2009. The Revenue argued that the appellant was required to pay duty based on the maximum number of pouch packing machines installed in their factory, treating the manufacture of different RSP (Retail Sale Price) products as if separate machines were used for each RSP. The appellant contended that they had only one packing machine and the proviso to Rule 8 of PMPM Rules, 2008, which deems the use of multiple machines for different RSPs, was inconsistent and unworkable. The Tribunal, following the precedent set in the case of Trimurti Fragrance (P) Ltd., held that the term "new retail sale price" should be understood in the context of Rule 5 of the PMPM Rules, 2008, which treats all RSPs within a particular slab as the same. Consequently, the demand of ?1,25,29,839/- was set aside as the appellant had paid duty on the highest RSP of the notified goods.

2. Imposition of Penalty under Rule 17 of the PMPM Rules, 2008:
The penalty of ?1,25,000/- imposed under Rule 17 of the PMPM Rules, 2008, was also challenged. The Tribunal, in line with its decision on the duty demand, found that the penalty was not tenable as the appellant had complied with the duty payment based on the highest RSP of the notified goods. Therefore, the penalty was set aside.

3. Abatement of Duty under Rule 10 of the PMPM Rules, 2008:
The appellant sought abatement of duty for periods of factory closure, which was initially rejected by the Jurisdictional Assistant Commissioner. The Revenue argued that the appellant was not entitled to abatement as they had cleared non-notified goods (Pan Samagri) during the closure period and the abatement amount had not been quantified by the Department. The Tribunal, referencing its decision in the case of M/s Dharampal Satyapal Ltd., held that the appellant was entitled to abatement during the period of closure, irrespective of the clearance of non-notified goods. The objections raised by the Revenue were deemed untenable, and the appellant was granted abatement for the disputed period.

Conclusion:
The appeal was allowed on both grounds of abatement and the quantum of duty payable under the PMPM Rules, 2008. The impugned order was set aside, and consequential benefits were granted to the appellant in accordance with the law.