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TMI Blog2022 (11) TMI 1537X X X X Extracts X X X X X X X X Extracts X X X X ..... Section 3 of the Central Excise Act, 1944. In Annexure II to the Show Cause Notice, in remarks column the manner of determination of the RSP has been stated Retail packs of 4 gms Cleared without printing RSP. Tariff Value 3 per unit pack (Notfn No 3/2006-CE (NT) dated 01.03.2006 as amended.) Duty Payable per packing machine per month as per Sr No 4 of table 1 to Notification No 42/2008_CE dated 01.07.2008 as amended. Thus it is seen that RSP has been determined on the basis of the Notification issued under Section 3, fixing Tariff Value. Such method of determination of RSP is not even prescribed method for the determination of RSP as per Rule 12. It is settled law that when a statue prescribes a manner of doing the thing then it would be done in the manner prescribed or not at all. Hence there are no position to approve of the manner in which RSP has been determined specifically by referring to Notification issued under Section 3 which by use of non obstante clause in Section 3A. Conclusion - i) The compounded levy scheme applies only to goods manufactured with the aid of packing machines, thus the compounded levy scheme was not applicable. ii) Determination of RSP is invalid. App ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Philips India Ltd., Sahar Road, Chakala, Andheri East, Mumbai - 400 093. iii) I impose penalty of Rs. 1,00,00,000/- (Rupees one crore only) on M/s. Godfrey Philips India td., Sahar Road, Chakala, Andheri East, Mumbai - 400 093, under rule 17 (1) of the Pan Masala Packing Machines (Capacity Determination and Collection of Duty) Rules, 2008," 2.1 Appellant desirous of expanding its business to manufacture pan masala, vide their letter dated 14.5.2007 informed the jurisdictional authorities that they have put a pilot plant of Pan Masala falling under Chapter heading 21069020 within its cigarette manufacturing premises and further stating that the samples so manufactured will be used for 'testing purpose' and will be consumed within the factory premises along with some sample being sent out of the factory premises also for market research etc. Such samples would be unbranded and would not be in retail packs. Pursuant to installation of the pilot plant, vide letter dated 13.7.2007, the appellant applied for incorporation of pan masala in the registration certificate. The ground plan and the requisite machineries installed was also submitted. 2.2 Circular No. 854/12/2007 dated 7.9.2 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... d cleared by them without payment of appropriate CE duty as required under the provisions of notification no.42/2008 dt. 01.07.08 read with notification no.29/2008 & 30/2008 both dated 01.07.08, should not be held liable for confiscation under sub section (1) of rule 17 of notification no.30/2008 dated 01.07.08 read with "Pan Masala Packing Machines (Capacity Determination and Collection of Duty) Rules, 2008; ii. the differential CE duty amounting to Rs. 1,55,91,121/- (Rupees one crore fifty five lakhs ninety one thousand one hundred twenty one only) (As detailed in Annexure I to this SCN) should not be demanded and recovered from them on the Pan Masala manufactured and cleared during the period from 01.07.08 to 31.12.08, under the provisions of notification no.42/2008 - C.E. dated 01.07.08 read with "Pan Masala Packing Machines (Capacity Determination and Collection of Duty) Rules, 2008", read with Section 11A(1) of the CEA, 1944; iii. the interest at the appropriate rate should not be demanded from them under the provisions of "Pan Masala Packing Machines (Capacity Determination and Collection of Duty Rules, 2008" read with Section 11AB of CEA, 1944 i ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... productions only. ➢ When the machinery for collection and computation fails, the levy is not intended to cover such a situation. - o PNB Finance [2008 (13) SCC 94] o Tata Sky [2013 (4) SCC 656] ➢ In any case Rule 11 and 12 of Pan Masala Rules, 2008 were not followed in the present case. There is no proposal for confiscation of the goods as provided under Rule 11. ➢ Appellant have vide letter dated 11.12.2008, intimated that they will not be using the packing machine lying in their plant. Department took 22 months thereafter to seal the machine. No demand beyond the date of intimation can be sustained. ➢ Decisions relied upon by the revenue do not support the case ➢ No interest can be demanded and penalty imposed. 3.3 Arguing for the revenue learned Authorized representative while re-iterating the findings recorded in the impugned order relies on the following decisions in support o Godfrey Philips India Ltd [2019 (369) ELT 706 (T-Mum)] o Ashok & Co Pan Bahar Ltd. [2018 (359) ELT 329 (T-Del)] 4.1 We have considered the impugned orders along with the submissions made in appall and during the course of arguments. 4.2 Following f ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... rcumstances of the instant case, the imposition of excise duty in terms of the said rules would result in retrospective operation of the legislation which is against established principles of taxation; and (ix) in view of the submissions no liability of excise duty, interest nor confiscation can be initiate and penalty imposable as no duty was required to be discharged. 20. Now, taking up the first contention it is observed that M/s GPIL informed the department on 14.05.2007 that they intend to put up a pilot plant for manufacture of pan masala which would be used for testing purpose. Further, M/s GPIL on 13.07.2007 made an application enclosing ground plan indicating the proposed layout of the pan masala pilot plan / machinery installed and requested for incorporating the new product pan masala in their central excise registration, which was duly incorporated. M/s GPIL had in fact specifically stated in their letter dated 13.07.2007 that they had intimated the installation of equipment relating to pilot plan for manufacturer of pan masala. The above facts / documents establish that they had installed the machinery for manufacturer of pan masala well before the compounded levy ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... sala, it was mandatory for M/s GPIL to file declaration under 6(1) of the Pan Masala Packing Machines (Capacity Determination and Collection of Duty) Rules, 2008 in Form 1 within ten days of the said rules coming into force i.e. on or before 10.07.2008 which they filed to file, thereby they contravened the provisions of the said rules. Further if declaration had been filed by them, the appropriate authority after enquiry would have approved the declaration or rejected the declaration by passing a suitable order in terms of rule 6 (2) of the Pan Masala Packing Machines (Capacity Determination And Collection of Duty) Rules, 2008. Moreover, after rescinding of notification No. 38/2007 C.E. dated 19.12.2007 vide notification No. 44/2008 C.E. dated 16.07.2008 no other option was available w.e.f. 01.07.2008 to a manufacturer of pan masala hence, the procedures prescribed under notification No. 30/2008 C.E. dated 01.07.2008 were required to be followed which M/s GPIL failed to follow comply with. These facts are on record and the provisions of the relevant notifications referred to above did not require any enquiry, therefore, the plea of M/s GPIL that notices were issued based on incorre ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the explanation to the said rule reads as under: "Unless otherwise specified in these rules, for the purposes of these rules, the goods shall be deemed to have been manufactured or produced with the aid of packing machine, if they are cleared from a factory where a packing machine is installed, irrespective of whether it is in use or not, or is in working condition or not." From the plain reading of the said explanation it is clear that goods shall be deemed to be manufactured with the aid packing machine irrespective of whether it is in use or not, or is in working condition or not. As such, as M/s GPIL had not filed declaration for installed packing machine as detailed herein above and as the packing machine was actually installed in the factory, the duty was leviable on deemed production under the compounded levy scheme. 23. M/s GPIL have also contended that in the absence of retail sale price, the compounded levy scheme was not applicable, as in such case neither the deemed production capacity nor the rate of duty can be determined. I observe that tariff value of pan masala, in retail packages has been fixed vide notification No. 03/2006 C.E.(N.T.) dated 01.03. ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the Pan Masala Packing Machines (Capacity Determination and Collection of Duty) Rules, 2008 was not filed, and therefore the jurisdictional Assistant Commissioner was in no position to make any inquiry and pass order concerning the annual capacity of production in terms of rules 6(2) of the Pan Masala Packing Machines (Capacity Determination and Collection of Duty) Rules, 2008. It is also observed that no duty can be abated in the instant case in terms of proviso to section 3A (3) as, the abatement can be allowed only if the manufacturer fulfills such conditions as are prescribed in this regard. M/s GPIL had not filed declaration under rule 6(1) of the Pan Masala Packing Machines (Capacity Determination and Collection of Duty) Rules, 2008 nor did they file any intimation with the jurisdictional Assistant Commissioner under rule 10 of the Pan Masala Packing Machines (Capacity Determination and Collection of Duty) Rules, 2008 to the effect that the packing machine had not been used to produce pan masala since May, 2008. As such the conditions of intimation prescribed under the rules were not fulfilled and therefore, abatement of duty cannot be allowed. 25. As discussed hereinabove ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ods by such factory : Provided that where a factory producing notified goods is in operation during a part of the year only, the annual production thereof shall be calculated on proportionate basis of the annual capacity of production : Provided further that in a case where the factor relevant to the production is altered or modified at any time during the year, the annual production shall be re-determined on a proportionate basis having regard to such alteration or modification. (3) The duty of excise on notified goods shall be levied, at such rate, on the unit of production or, as the case may be, on such factor relevant to the production, as the Central Government may, by notification in the Official Gazette, specify, and collected in such manner as may be prescribed : Provided that where a factory producing notified goods did not produce the notified goods during any continuous period of fifteen days or more, the duty calculated on a proportionate basis shall be abated in respect of such period if the manufacturer of such goods fulfils such conditions as may be prescribed. (4) The provisions of this section shall not apply to goods produced or manufactured, by a hundr ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... conferred by the said section Central Government has notified the goods as per Notification No 29/2008-CE (NT) referred above. 4.6 Central Government issued notification no 30/2008-CE (NT) notifying the Pan Masala Packing Machines (Capacity Determination And Collection of Duty) Rules, 2008. Relevant Extracts of the said rules are reproduced below: "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 3. Application. - These rules shall apply to pan masala and pan masala containing tobacco, commonly known as gutkha, notified under sub-section (1) of section 3A of the Act by the notification of the Government of India in the Ministry of Finance (Department of Revenue), No.29/2008-CE (N.T.), dated the 1st July, 2008. 4. Factor relevant to production. - The factor relevant to the production of notified goods shall be the n ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the name of the manufacturer of each of the packing machine, its identification number, date of its purchase and the maximum packing speed at which they can be operated for packing of notified goods of various retail sale prices; (viii) description of goods to be manufactured including whether pan masala or gutkha or both are to be manufactured, their brand names, etc; (ix) retail sale prices of the pouches to be manufactured during the financial year; (x) the plan and 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, to the Deputy Commissioner of Central Excise or the Assistant Commissioner of Central Excise, as the case may be, with a copy to the Superintendent of Central Excise: Provided that a new manufacturer shall file such declaration at least fifteen days prior to the commencement of commercial production of notified goods in his factory. 2) On receipt of the declaration referred to in sub-rule (1), the Deputy Commissioner of Central Excise or the Assistant Commissioner of Central ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the case may be, in terms of sub-rule (2), such as changes relating to addition or removal of packing machines in the factory or making alterations in any part or section of the approved premises or in the number of machines to be used in such part or section or 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 fifteen 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. - …. 9. Manner ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... d 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 the duty payable, and continues to operate any packing machine, he shall be liable to pay the duty for the remaining months of the financial year based on the number of operating packing machines declared in the month for which duty was last paid by him or the total number of packing machines found available in his premises at any time thereafter, whichever is higher. 11. Retail sale price to be declared on the package.- Every manufacturer s ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... l sale price of all goods removed during a period of one month before and after the date of removal of such goods: Provided that where the manufacturer alters or tampers the declared retail sale price resulting into more than one retail sale price available on such goods, then, the highest of such retail sale price shall be taken as the retail sale price of all such goods. (iv) If the retail sale price of goods cannot be ascertained under (i) to (iii), the retail sale price shall be ascertained in accordance with the principles of this rule. 4.7 By Notification No 42/2008-CE the rates of duty were specified. The text of the notification is reproduced below: In exercise of the powers conferred by sub-section (3) of section 3A of the Central Excise Act, 1944, the Central Government hereby specifies on, - (i) pan masala falling under tariff item 2106 90 20 of the First Schedule to the Central Excise Tariff Act, 1985 (5 of 1986)except the pan masala containing not more than 15% betel nut; and (ii) pan masala containing tobacco, commonly known as gutkha, falling under tariff item 2403 99 90 of the said Tariff Act (hereinafter referred to as specified goods),manufactured with ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... maximum of such retail sale prices shall be deemed to be the retail sale price: Provided further that if the goods are cleared in wholesale packages containing a number of standard packages with retail sale price declared on them, then, such declared retail sale price shall be taken into consideration for determining the rate of duty under respective S. Nos. referred to in Table-1. 2. The number of packing machines, for the purpose of computation of the rate of excise duty specified in the opening paragraph shall be determined in terms of Pan Masala Packing Machines (Capacity Determination and Collection of Duty) Rules, 2008. 3. The duty levied and collected on such specified goods shall be the aggregate of the duty leviable under the Central Excise Act, 1944 (1 of 1944), the additional duty of excise leviable under section 85 of the Finance Act, 2005 (18 of 2005), the National Calamity Contingent Duty leviable under section 136 of the Finance Act, 2001 (14 of 2001), Education Cess leviable under section 91 of the Finance Act, 2004 (23 of 2004) and Secondary and Higher Education Cess leviable under section 136of the Finance Act, 2007 (22 of 2007) and shall be apportioned in t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ermined by the departmental authorities in case were the goods were cleared without declaration of RSP or the RSP was obliterated etc., after the clearance of the goods. The Rule 12 do not prescribe the manner in which revenue has proceeded to determine the RSP for making these demands by referring to the tariff values as per the notification issued under Section 3 of the Central Excise Act, 1944. In Annexure II to the Show Cause Notice, in remarks column the manner of determination of the RSP has been stated "Retail packs of 4 gms Cleared without printing RSP. Tariff Value 3 per unit pack (Notfn No 3/2006-CE (NT) dated 01.03.2006 as amended.) Duty Payable per packing machine per month as per Sr No 4 of table 1 to Notification No 42/2008_CE dated 01.07.2008 as amended." Thus it is seen that RSP has been determined on the basis of the Notification issued under Section 3, fixing Tariff Value. Such method of determination of RSP is not even prescribed method for the determination of RSP as per Rule 12. It is settled law that when a statue prescribes a manner of doing the thing then it would be done in the manner prescribed or not at all. Hence we are not in position to approve of the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... stitute an integrated Code and when in a case the computation provisions cannot apply, such a case would not fall within Section 45. In the present case, the Banking Undertaking, inter alia, included intangible assets like, goodwill, tenancy rights, man power and value of banking licence. On facts, we find that item-wise earmarking was not possible. On facts, we find that the compensation (sale consideration) of Rs. 10.20 cr. was not allocable item- wise as was the case in Artex Manufacturing Co. (supra). 18. For the aforestated reasons, we hold that on the facts and circumstances of this case, which concerns assessment year 1970-71, it was not possible to compute capital gains and, therefore, the said amount of Rs. 10.20 cr. was not taxable under Section 45 of the 1961 Act. Accordingly, the impugned judgment is set aside. Tata Sky [2013 (4) SCC 656] "35. On a careful examination of the 1936 Act as a whole, and more particularly on a conjoint reading of clauses (a) ["Admission to an entertainment"], (b) ["Entertainment"] and (d) ["Payment of admission"] along with section 3 creating the charge and section 4 providing the collection machinery, we find ourselves in agreement wi ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... uch intimation shall direct for sealing of all the packing machines available in the factory for the said period under the physical supervision of Superintendent of Central Excise, in the manner that these cannot be operated during the said period. Provided that during such period, no manufacturing activity, whatsoever, in respect of notified goods shall be undertaken and no removal of goods shall be effected by the manufacturer : Provided further that when the manufacturer intends to restart his production of notified goods, he shall inform to the Deputy Commissioner of Central Excise or the Assistant Commissioner of Central Excise, as the case may be, of the date from which he would restart production, whereupon the seal fixed on packing machines would be opened under the physical supervision of Superintendent of Central Excise." A plain reading of the said provisions makes it clear that unless all packing machines available in the factory have been sealed and factory remains completely closed, abatement for the sealing of one machine cannot be allowed. Since we are remanding the matter to the Adjudicating authority, the issue of abatement may also be considered, keeping in ..... 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