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TMI Blog2022 (5) TMI 1115X X X X Extracts X X X X X X X X Extracts X X X X ..... C.EX/2011 dated 27.05.2011 E/168/2012 PIII/RS/10 & 11 /2012 dated 24.01.2012 08/C.EX/2011 dated 13.10.2011 E/589/2012 PIII/RS/10 & 11 /2012 dated 24.01.2012 R-02/2011-12 dated 18.10.2011 E/714/2012 PIII/RS/39/2012 dated 13.02.2012 R-03/2011-12 dated 03.11.2011 2.1 Appellant is engaged in manufacture and clearance of Pan Masala not containing tobacco, classifiable under Tariff Item 21069020 of the First Schedule to Central Excise Tariff Act, 1985. They filed the declaration in Form 1 from time to time as per Pan Masala Packing (Capacity Determination & Collection of Duty) Rules, 2008 read with Notification No 30/2008 of the CE(NT) dated 01.07.2008 and Notification No. 42/2008-CE(NT) dated 01.07.2008 as amended for determination annual capacity of production and monthly duty liability to the jurisdictional Assistant/ Deputy Commissioner. Assistant/ Deputy Commissioner determined the said capacity and the Monthly Duty Liability as per the order referred in table below: Order in Original No R-01/C.EX/2011 dated 27.05.2011 A) Monthly Duty Liability S No Retail Sale Price (per pouch) No of packing ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ity as per the impugned orders referred in para 1 above. 2.3 Aggrieved, appellants have preferred these appeals before the tribunal. 3.1 We have heard Shri Gajendra Jain, Advocate for the appellant and Shri S Anantha Krishnan, Commissioner, Authorized Representative for the revenue. 3.2 Arguing for the appellant, learned counsel submits: * Under the scheme of Pan Masala Rules, the adjudicating authority was only required to determine the annual capacity of production. However, Assistant Commissioner has exceeded jurisdiction by also determining the monthly duty liability. Reliance is placed on the decision of CESTAT in case of Godfrey Phillips India Ltd. Vs. CCE - 2017 (352) ELT 232 (T). * Determination Order dated 18.12.2009 was suo motu revised by the Deputy Commissioner vide Order dated 30.11.2010, whereas as per these rules Deputy Commissioner does not have any power to revise / review Determination Order passed earlier. * Machine No. I was sealed by the jurisdictional Superintendent at midnight on 31.10.2009 and since then, it remained in sealed condition. This factual position is not disputed by Revenue. Once the machine is uninstalled and sealed by ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ZETTE OF INDIA, EXTRAORDINARY, PART II, SECTION 3, SUB-SECTION (i)]GOVERNMENT OF INDIA MINISTRY OF FINANCE(DEPARTMENT OF REVENUE)Notification No. 30/2008- Central Excise (N.T.)New Delhi, the 1st July, 2008 G.S.R. (E).- In exercise of the powers conferred by sub-sections (2) and (3) of section 3A of the Central Excise Act, 1944(1 of 1944), the Central Government hereby makes the following rules, namely:- 1. Short title and commencement. - (1) These rules may be called the Pan Masala Packing Machines (Capacity Determination And Collection of Duty) Rules, 2008. (2) They shall come into force on the 1st day of July, 2008. 2. Definitions. - In these rules, unless the context otherwise requires,- (a) "Act" means the Central Excise Act, 1944 (1 of 1944); (b) "notified goods" means goods specified by the Central Government by No.29/2008-C.E. (N.T.), dated the 1st July, 2008 under sub-section (1) of section 3A of the Act; (c) "packing machine" includes all types of Form, Fill and Seal (FFS) Machines and Profile Pouch Making Machines, by whatever name called, whether vertical or horizo ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... per month (1) (2) (3) 1. Up to Rs. 1.00 62,40,000 2. From Rs. 1.01 to Rs. 1.50 62,40,000 3. From Rs. 1.51 to Rs. 2.00 59,28,000 4. From Rs. 2.01 to Rs. 3.00 59,28,000 5. From Rs. 3.01 to Rs. 4.00 57,40,800 6. From Rs. 4.01 to Rs. 5.00 57,40,800 7. From Rs. 5.01 to Rs. 6.00 57,40,800 8. Above Rs.6.00 56,16,000 (w.e.f 24th January 2014) Explanation . - For the purposes of this rule, if there are multiple track or multiple line packing machine which besides packing the notified goods in pouches, perform additional processes involving moulding and giving a definite shape to such pouches with a view to distinguish the brand or to prevent the counterfeiting of the goods, etc., two such tracks or lines shall be deemed to be one individual packing machine for the purposes of calculation of the number of pouches per operating packing machine per month. Provided that in case of multiple track or multiple line packing machine which are incapable of performing such additional processes, one such track or line shall be deemed to be one individual packing machine for the purposes of calculation of the number of pouches per operating packing machine per month. ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... referred to in sub-rule (1), the Deputy Commissioner of Central Excise or the Assistant Commissioner of Central Excise, as the case may be, shall, after making such inquiry as may be necessary including physical verification, approve the declaration and determine and pass order concerning the annual capacity of production of the factory within three working days in accordance with the provisions of these rules: Provided that the Deputy Commissioner of Central Excise or the Assistant Commissioner of Central Excise, as the case maybe, may direct for modifications in the plan or details of the part or section of the factory premises intended to be used by the manufacturer for manufacture of notified goods of different retail sale prices, as he thinks proper, for effective segregation of the parts or sections of the premises and the machines to be used in such parts or sections before granting the approval: Provided further that if the manufacturer does not receive the approval in respect of his declaration within the said period of five working days, the approval shall be deemed to have been granted subject to& ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... commencing manufacture of goods of a new retail sale price or discontinuation of manufacturing of goods of existing retail sale price, etc., he shall file a fresh declaration to this effect at least three working days in advance to the Deputy Commissioner of Central Excise or the Assistant Commissioner of Central Excise, as the case may be, who shall approve such fresh declaration and re-determine the annual capacity of production following the procedure specified in sub-rule (2). 7. Duty payable to be calculated. - The duty payable for a particular month shall be calculated by application of the appropriate rate of duty specified in the notification of the Government of India in the Ministry of Finance (Department of Revenue), No.42/ 2008-CE, dated the 1st July, 2008 to the number of operating packing machines in the factory during the month. 8. Alteration in number of operating packing machines. - In case of addition or installation or removal or uninstallation of a packing machine in the factory during the month, the number of operating packing machine for the month shall be taken as the maximum number of packing machines installed on any day during the month: ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... month and the number of days remaining in that month counting from the date of such revision and the duty liability for the month shall not be discharged unless the differential duty is paid by the 5th day of the following month and in case the amount of duty so recalculated is less than the duty paid for the month, the balance shall be refunded to the manufacturer by the 20th day of the following month: Provided also that in case it is found that a manufacturer has manufactured goods of those retail sale prices, which have not been declared by him in accordance with provisions of these rules or has manufactured goods in contravention of his declaration regarding the plan or details of the part or section of the factory premises intended to be used by him for manufacture of notified goods of different retail sale prices and the number of machines intended to be used by him in each of such part or section, the rate of duty applicable to goods of highest retail sale price so manufactured by him shall be payable in respect of all the packing machines operated by him for the period during which such manufacturing took place: Provided also that in case a manufacturer does not pay th ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... price to be declared on the package.- ...... 12. Determination of retail sale price in case of non- declaration, obliteration, tampering, etc.- ....... 13. Addition or removal of packing machines and other restrictions. - (1) In case a manufacturer does not intend to further operate a packing machine, he shall intimate the same to the Deputy Commissioner of Central Excise or the Assistant Commissioner of Central Excise, as the case may be, at least three working days in advance, whereupon the same shall be uninstalled and sealed by the Superintendent of Central Excise and removed from the factory premises under his physical supervision Provided that in case it is not feasible to remove such packing machine out of the factory premises, it shall be uninstalled and sealed by the Superintendent of Central Excise in such a manner that it cannot be operated. (2) In case a manufacturer wants to add or install a packing machine in his premises, he shall give a notice to this effect at least three working days in advance to the Deputy Commissioner of Central Excise or the Assistant Commissioner of Central Excise, as the case may be, who shall allow the additi ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ayable for a particular month is calculated on the basis of the appropriate rate of duty specified and the number of operating packing machines installed in the factory during the month. * Maximum number of packing machines installed any day during the month shall be taken for calculation of the monthly duty payable. * Commencing manufacture of goods of a new retail sale price during the month on an existing machine shall be deemed to be addition in the number of operating packing machines for the month * Non-working of any installed packing machine during the month, for any reason whatsoever, shall be deemed to be operating packing machine for the month and monthly duty liability is to be calculated accordingly. 10. Compounded levy Scheme for payment of Central Excise duty under section 3A of the Central Excise Act, 1944 is on the basis of capacity of production specified in respect of notified goods and not on the basis of actual production. Quantum of production per machine is determined on deeming basis and not on actual basis. Number of pouches for specified retail price per operating packing machine per month is prescribed under Rule 5. Proviso to Rule 8 deems manufac ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ntral Government to specify the factor relevant to production and the quantity that is deemed to be produced by use of a unit of such factor by framing rules. Section 3(2)(b)(ii) empowers the Central Government to enact rules providing for determination of the annual capacity of production of factory on the basis of such factor and such annual capacity of production shall be deemed to be the annual production. 3. Rule 4 of the Pan Masala Rules provides that the factor relevant to production of notified goods shall be the number of packing machines in the factory of the manufacturer. 4. Rule 6(1) of the Pan Masala Rules provides for declaration to be filed by the manufacturer intimating the number of installed packing machines which the manufacturer intends to operate as well as Retail Sale Price ("RSPP) of pan masala pouches intended to be manufactured. Rule 6(2) provides that the Assistant Commissioner or Deputy Commissioner of Central Excise shall pass an order determining the annual capacity of production of the factory on receipt of declaration from the manufacturer. Rule 6(3) provides that the annual capacity of production shall be calculated by application of ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... P 6) Machine No. 2 RSP 2 1 Three machines (RSP 2 and RSP 4 and RSP 6) Machine No. 3 RSP 4 1 Three machines (RSP 2 and RSP 4 and RSP 6) Machine No.4 RSP 6 1 Three machines (RSP 2 and RSP 4 and RSP 6) Total 3 machines 12 machines (4 machines multiplied by three RSPs) 4.6 The scheme of the Pan Masala Packing Machines (Capacity Determination And Collection of Duty) Rules, 2008, has been well explained in the impugned order and the during the course of arguments by the appellants. In terms of the said rules the appellant are required to make the declaration in terms of Rule 6 of the said rules, declaring the number of installed packing machines in their factory and the retail sale price of the pouches to be produced by them. On the basis of the declaration made and after causing the verification of the same the Assistant/ Deputy Commissioner passes an order determining the Annual Capacity of production as have been held by the tribunal in the case of appellants referred earlier in para 3.2. In terms of Rule 7 and 9, on the basis of the capacity of production so determined the appellant determines and pays the duty every month at the start of month. ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Corporation [2018 (364) ELT 954 (T)], tribunal has held as follows: "7. Having considered the rival contentions and on perusal of records, we are not in position to appreciate the argument of Revenue that once a machine is installed, it shall be treated as operational machine even if the machine was sealed in such a manner that it became unoperative. We do not find any merit in the grounds raised by Revenue. We, therefore, reject the appeal filed by Revenue. The respondent shall be entitled for the consequential relief as per law." Thus the impact of the these decisions is that once the packing machine is sealed in the manner as prescribed then the same shall be treated as uninstalled and shall not be taken into account for determination of the Annual Capacity and duty payable." 4.7 These rules were amended retrospectively by the Section 109 (reproduced below) of The Finance (No 2) Act, 2014 (25 of 2014) in the following manner: "109. (1) In the Pan Masala Packing Machines (Capacity Determination and Collection of Duty) Rules, 2008, as published in the Official Gazette vide notification of the Government of India in the Ministry of Finance (Department of Revenue) numbe ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the impugned orders are dated 28.10.2011, 24.01.2012, and 13.02.2012, i.e. prior to the amendments made retrospectively in the rule retrospectively with effect from 13th April 2010. Hence these orders need to be reconsidered in terms of the said amendments made by the Finance (No 2) Act, 2014, and decisions referred to earlier by us which all are subsequent to the impugned orders. Ideally matter needs to be remanded back to the original authority for determination of the Annual Capacity of Production after taking into account the above amendments and decisions. 4.9 The amendments made in the year 2014, should ideally had been brought to the notice of the bench at that time itself and remand sought by the appellant/ respondent. However even though the said order was passed in the year 2012, revenue never came up seeking vacation of stay and remand in the matter when so ever the matter got listed earlier. This delay, has led to considerable delay in finalization of the duty payment considerably. In our view the proceedings for the determination of Annual Capacity of Production themselves have become redundant with the passage of time. The use of the such determination was for ..... X X X X Extracts X X X X X X X X Extracts X X X X
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