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2018 (9) TMI 1426 - AT - Central ExciseClandestine manufacture and removal - manufacture of Pan Masala and Gutkha - Rate of duty for packing machine per month for pan masala containing tobacco having RSP per pouch up to ₹ 1.00 was ₹ 12.50 lakhs. It was noticed by revenue that during the period from January, 2010 to October, 2010 manufacturer-appellant manufactured Gutkha of RSP ₹ 1.00 and RSP ₹ 0.50 on the same machine - Rule 8 of Pan Masala Packing Machines (Capacity Determination and Collection of Duty) Rules, 2008. Held that - The basis for arising of the demand was treating RSP ₹ 0.50 and ₹ 1.00 as two separate slabs whereas the ruling by Hon ble Allahabad High Court in the case of COMMISSIONER OF CENTRAL EXCISE KANPUR VERSUS M/S. TRIMURTY FRAGRANCES (P) LTD. 2015 (11) TMI 320 - ALLAHABAD HIGH COURT , clarified the law stating that if Gutkha with different MRPs are manufactured on the same machine when such MRPs fall within the same slab then it cannot be treated as two separate machines for fastening duty liability on the manufacturer. Demand not sustainable - appeal allowed - decided in favor of appellant.
Issues:
Appeal arising from Order-in-original regarding Central Excise duty demand for manufacturing Gutkha of different Retail Sales Prices (RSP) on the same machine. Analysis: 1. Issue of Duty Demand: The manufacturer-appellant was engaged in manufacturing Gutkha with different RSPs on the same machine. The revenue demanded Central Excise duty for this practice based on the deemed addition of packing machines. The Original Authority confirmed part of the demand but dropped another portion. The manufacturer contested the demand based on Rule 8 amendments and previous tribunal decisions. 2. Interpretation of Rules: The manufacturer argued that Rule 8 amendments from 13.04.2010 dictate that duty liability for manufacturing pouches of different RSPs on a single machine should be as applicable to the highest RSP. Referring to a previous tribunal case, it was contended that different RSPs within the same slab should not be treated as separate for duty calculation purposes. The manufacturer emphasized that the RSPs of ?1.00 and ?0.50 should not be considered separate for duty imposition. 3. Judgment and Decision: After hearing both sides, the Tribunal found that treating ?0.50 and ?1.00 RSPs as separate slabs for duty calculation was incorrect. Citing a ruling by the Hon'ble Allahabad High Court, it was clarified that if different RSPs fall within the same slab, they should not be considered separate for duty liability. Consequently, the Tribunal held that the demand based on separate slabs was unsustainable. The appeal by the manufacturer was allowed, and the appeal by revenue was dismissed. In conclusion, the Tribunal's decision was based on the interpretation of Rule 8 amendments and previous legal precedents regarding the treatment of different RSPs within the same slab for duty calculation. The judgment clarified that when multiple RSPs fall within the same slab and are manufactured on the same machine, they should not be treated as separate for imposing duty liability on the manufacturer.
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