2024 (5) TMI 1330 - AT - Central Excise

Determination of duty liability of the manufacturer with penalty - new retail sale price - manufacture of Pan Masala and Pan Masala containing Tobacco called Gutkha - Rule 17 of Pan Masala Packing Machines (Capacity Determination And Collection of Duty) Rules, 2008 - Applicability of retrospective amendments to Rule 8 of the PMPM Rules. HELD THAT - As per the observations made by the Revenue in the said appeal to the effect that 1st proviso to Rule 8 of the Pan Masala Packing Machines (Capacity Determination And Collection of Duty) Rules, 2008 is applicable only w.e.f. 13.04.2010 whereas the show cause notice adjudicated and disposed by the Adjudicating authority relates to the period prior to 13.04.2010 is contrary to this - there are no merits in this contention made in this appeal. In the case of COMMISSIONER OF CENTRAL EXCISE KANPUR VERSUS M/S. TRIMURTY FRAGRANCES (P) LTD. 2015 (11) TMI 320 - ALLAHABAD HIGH COURT it is held that ' in terms of this 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 amendment is in accordance with the 6th proviso to Rule 9 and is 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 in such a situation at the rate applicable to the highest RSP. ' Learned Commissioner has referred to the decision of the Tribunal in the case of M/S. KAY PAN SUNGANDH (P) LIMITED VERSUS COMMISSIONER OF CENTRAL EXCISE, RAIPUR 2017 (4) TMI 982 - CESTAT NEW DELHI wherein the Tribunal relied on the decision in case of Trimurti Fragrances holding that the said amendment though made from 13.04.2010 but the same is applicable for the period prior to that, i.e. from the date of enforcement of the Pan Masala Packing Machines (Capacity Determination And Collection of Duty) Rules, 2008. Tribunal in this case observed ' In the case in hand, it is not disputed that in mid of September 2008, under intimation to the department, the appellant had manufactured gutkha pouches with RSP Rs. 1.00 on the 12 machines which they were using for manufacture of gutkha with RSP Rs. 1.50. It is also not in dispute that they have discharged the duty liability on the production capacity of these 12 machines based on the calculation that they are going to manufacture gutkha with RSP Rs. 1.50.' There are no reasons to interfere with the impugned order and the same is sustained. The appeal filed by the Revenue is dismissed.

Summary

Issues Involved:
1. Determination of duty liability under Pan Masala Packing Machines (Capacity Determination And Collection of Duty) Rules, 2008.
2. Interpretation of "new retail sale price" under Rule 8 of PMPM Rules.
3. Applicability of retrospective amendment to Rule 8 effective from 13.04.2010.

Summary:

1. Determination of Duty Liability under PMPM Rules:
The respondent was manufacturing Pan Masala and Gutkha under various retail sale prices (RSP). The duty liability on these products was to be discharged on a monthly compounding basis as per the Pan Masala Packing Machines (Capacity Determination And Collection of Duty) Rules, 2008 (PMPM Rules). The respondent filed declarations regarding the number of machines and their respective RSPs. A show cause notice (SCN) was issued alleging ambiguous details of RSPs and short payment of duty amounting to Rs.72,87,50,000/-. The Adjudicating Authority dropped the demand, leading to the Revenue's appeal.

2. Interpretation of "New Retail Sale Price" under Rule 8:
The core issue was the interpretation of "new retail sale price" (RSP) under Rule 8 of the PMPM Rules. The Revenue contended that the respondent should pay duty for each RSP manufactured on each machine. However, the Tribunal referred to its decision in Trimurti Fragrance (P) Ltd. Vs CCE Kanpur, 2015 (329) ELT 680 (Tri-Del), which clarified that "new retail sale price" should be understood within the context of RSP slabs specified in Rule 5. The Tribunal held that different RSPs within the same slab do not constitute a "new retail sale price" for the purpose of additional duty liability.

3. Applicability of Retrospective Amendment to Rule 8:
The Tribunal also considered the retrospective amendment to Rule 8 effective from 13.04.2010, which stipulated that duty should be paid at the rate applicable to the highest RSP for the whole month if different RSPs are produced on the same machine. This amendment was found to be in line with the existing provisions and clarified the government's intention to levy duty based on the highest RSP rather than treating each RSP as a separate machine for duty purposes.

Conclusion:
The Tribunal upheld the Adjudicating Authority's decision to drop the demand, dismissing the Revenue's appeal. The Tribunal found no merit in the Revenue's contentions, affirming that the interpretation of "new retail sale price" and the retrospective amendment to Rule 8 supported the respondent's duty discharge method. The decision was consistent with previous rulings in similar cases, including affirmations by the Hon'ble Allahabad High Court.