9911796707
TMI Blog2023 (4) TMI 1193X X X X Extracts X X X X X X X X Extracts X X X X ..... ould be used for manufacture of pan masala having RSP of Rs.2.00. The appellant also stated that they would discontinue to manufacture pan masala having RSP of Rs. 1.50 along with the letter, the appellant submitted the declaration in prescribed Form-1 in terms of Rule 6 of the said Pan Masala Rules. The appellant accordingly paid Central Excise duty on pro-rata basis as per number of days the pouch packing machines operated for manufacture of particular RSP in terms of third proviso to Rule 9 of the said Pan Masala Rules. Due to market recession and having cut-throat competition in the market, the appellant has discontinued existing retail sale price of Rs. 2.00 permanently and restored sales price of Rs. 1.50 with effect from 08.04.2012. Accordingly, the appellant in advance intimated to the Assistant Commissioner having jurisdiction over his factory for change of retail sales price as per Rule 6 (6) of the said Pan Masala Rules. The appellant was issued show cause notice and called upon to show cause to as to why Central Excise duty should not be demanded and recovered under Section 11A of the Central Excise Act, 1944 read with Rule 9 of Pan Masala Rules along with interest and ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... facture of goods of retail sale price of Rs. 1.00 in past. He submits that appellant did not manufacture the goods of retail sale price of Rs. 1.00 since February 2011 to December 2011. The appellant discontinued retail sale price Rs. 1.00 permanently in the month of March 2011 and therefore, they did not manufacture goods of Rs. 1.00 during interregnum period. The appellant re-introduced retail sale price Rs. 1.00 to capture the market and compete with competitors. 2.1. It is his submission that appellant permanently discontinued manufacturing of goods of retail sale price of Rs. 1.00, the officers did not raise any issue and permit to manufacture notified goods of new introduced price of Rs. 1.50 hence, finding of the Revenue is that the appellant manufactured the notified goods of retail sale price of Rs. 1.00 in past prior to February 2011 and therefore, benefit of pro-rata duty to the extent of use of operating machines in a month is not permissible, is miscarriage of justice. He submits that it is appreciated that appellant filed declaration in prescribed Form No.1 under Rule 6 on 02.01.2012 showing their intention. While accepting the declaration, the Revenue extended the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... proviso to Rule 9 puts the condition that the manufacture should permanently discontinue manufacture of notified goods with existing retail sale price for payment of duty on pro-rata basis. Since the appellant discontinued retail sale price of Rs. 1.50 since January 2012 which have been accepted by the Revenue for the month of February 2012 and March 2012, finding of the respondent that there was no intention on the part of the appellant to discontinue permanently is factually incorrect. 2.3 As regards the retail sale price of Rs. 2.00 for manufacture of the notified goods through one operating machine, he submits that Revenue accepted the declaration filed on 02.01.2012 for allowing payment of duty on pro-rata basis based on the days of which the operating machines used for manufacture of notified goods. However, the said benefit was not extended in the month of April 2012 when the appellant decided to discontinue retail sale price of Rs. 2.00 for manufacture of notified goods permanently. He submits that due to cut-throat competition and non acceptance of higher price by the customers, the appellant permanently discontinued retail sale price Rs. 2.00 with effect from 08.04.2012 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... proviso to Rule 9 of Pan Masala Packing Machines (Capacity Determination and Collection of duty) Rules 2008. The Rule 9 is reproduced below:- Rule 9. Manner of payment of duty and interest. The monthly duty payable on notified goods shall be paid by the 5th day of the same month and an intimation in form 2 shall be filed with the jurisdictional superintendent of central excise before the 10th day of the same month: Provided that monthly duty payable for the month of July, 2008 shall be paid on or before 15th day of July, 2008 : Provided further that if the manufacturer falls to pay the amount of duty by due date he shall be liable to pay the outstanding amount along with the interest at the rate specified by the central government vide notification under [section 11AA] of the Act on the outstanding amount, for the period starting with the first day after due date fill the date of actual payment of the outstanding amount: Provided also that in case of increase in the number of operating picking machines in the factory during the month on account of addition or installation of packing machines, the differential duty amount, if any, shall be paid by the 5th day of the followin ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... he total number of packing machines found available in his premises at any time thereafter, whichever is higher: Provided also that in case a new manufacturer commences production of notified goods in a particular month, his monthly duty payable for that month shall be calculated pro-rata on the basis of the total number of days in the month and the number of days remaining in that month starting from the date of commencement of the production of such notified goods and shall be paid within five days of such commencement.] From 4th proviso to Rule 9, the manufacturer is allowed to permanently discontinue the goods of existing retail sale price or commence a new retail sale price during the month. In such case, monthly duty payable shall be re-calculated pro-rata on the basis of total number of days in that month and the number of days remaining in that month counting from the date of such discontinuation or commencement and the duty liability for the month shall not be discharged. As per the facts of the present case, the appellant filed letter dated 10.01.2012 and submitted intimation of duty payment in prescribed Form-2 for the month of January 2012 as required under Rule 9 of ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... acturer by the 20th day of the following month:" From the careful reading of above 4th proviso to Rule 9 of Pan Masala Packing Machine Rules, it is observed that the term 'permanently' 'discontinues' or 'commences' is in respect of a particular month wherein the new retail sale price is discontinued or commenced, from which it is clearly inferred that the term 'permanently' does not mean that the discontinuation or commencement of new retail sale price should be once forever. It is clear that the discontinuation or commencement of new retail sale price should be once in a month and in the said month the retail sale price should not be changed again in the same month, connotes to the term 'permanently'. In the present case either commencement or discontinuation of a particular retail sale price was made only once in particular month i.e. in the month of January, 2012 or in April 2012. The Adjudicating Authority has wrongly interpreted the 4th proviso to construe that 'permanently' discontinuation or commencement of retail sale price means once a new retail sale price is commenced or discontinued the same cannot be re-introduced or discontinued ever in future. This interpretation le ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... , 2008 which is reproduced below:- "Provided that where a manufacturer uses an operating machine to produce pouches of different retail sale prices during a month, he shall be liable to pay the duty applicable to the pouch bearing the highest retail sale price for the whole month." From the reading of the above proviso, it can be seen that if in a month different retail price are used on operating machine, in such case the appellant is liable to pay duty applicable to the pouches of the highest retail sale price for the whole month. This also suggest that if the retail sale price is changed more than once which means not permanently then in that particular month the assessee is required to pay duty on the basis of highest retail sale price for the whole month. Therefore, there is no doubt that the term 'permanently' 'discontinuation' or 'commencement' of retail sale price must be considered in a particular month and not otherwise. In view of the above discussion, we are of the view that the terms 'permanently' in the 4th proviso to Rule 9 was not violated by the appellant. 8. Third proviso to Rule 9 provides that a manufacturer permanently discontinue manufacturing of goods of ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Machine Rules has been replaced with effect from 13 April 2010. The said proviso is reproduced below:- "Provided that where a manufacturer uses an operating machine to produce pouches of different retail sale price during a month, he shall be liable to pay the duty applicable to the pouches of the highest the retail sale price for the whole month." We find force in the submission of the appellant that in view of the above replaced proviso, the calculation of duty made by the Adjudicating Authority is prima-facie incorrect and at the most duty should have been calculated on the basis of highest retail sale price. However, since we have decided the matter on merits on the basis of 4th proviso to Rule 9 of Pan Masala Packing Machine Rules, we are not giving conclusive findings on the issue of duty calculation as per the first proviso to Rule 8. 11. As per our above discussion and findings, the differential duty confirmed by the lower authority is not sustainable. As regards the Revenue's appeal which is seeking imposition of penalty under Section 11AC for confirmation of demand of duty, since the duty demand itself is not sustainable, there is no question of any penalty, hence th ..... X X X X Extracts X X X X X X X X Extracts X X X X
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