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TMI Blog2011 (4) TMI 995X X X X Extracts X X X X X X X X Extracts X X X X ..... cise Officers conducted surprise check of the manufacturing premises of the appellant in the presence of two independent witness and found 30 pouch packing machines installed out of which 29 machines were found engaged in packing of Pukar Brand Gutkha pouches of M.R.P. Rs. 1/- and one machine was found engaged in manufacturing of Pukar Brand Pan Masala pouches of M.R.P. Rs. 1/-. On scrutiny of the copy of declaration filed by the Appellants in Form-1 dated 31-10-2008 (effective from 3-11-2008) under Pan Masala Packing Machines (Capacity Determination and collection of Duty) Rules, 2008 ((herein after referred to as 'Pan Masala Rules, 2008'), it was found that the appellants had declared 24 pouch packing machines for manufacture & packing of Pukar Brand Gutkha and 06 pouch packing machines for manufacture and packing of Pukar Brand Pan Masala both of M.R.P of Rs. 1/-. Thus the appellants were using 05 pouch packing machines for manufacture and packing of Pukar Brand Gutkha of MRP Rs. 1/- out of 6 machines declared for manufacture and packing of Pan Masala pouches of MRP Rs.1/- contrary to their declaration dated 31-10-2008. The first Show Cause Notice dated 27-5-2009 was accordingly ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... with interest under Section 11AB of the Act. A penalty of Rs. 46,25,000/- was also imposed upon the appellants under Rule 17(1) of the Pan Masala Rules 2008 read with Section 11AC of the Act. Aggrieved with the said orders, the subject appeal has been filed. 2.3 The case of the department in short is an under, as mentioned in the following para at No. 27 of the O-in-O dated 17-8-2010 :- "But on plain reading of the proviso to rule 8 it is amply clear that any change in the RSP of the notified goods on the same packing machines shall be counted as additional number of machine. In other words, if a machine being used in the packing of notified goods of one RSP, is also used in the packing of notified goods of other RSP during the same month, it shall be considered as an additional machine for the purpose of payment of duty. It further implies that if the nature of goods is changed i.e. the machine declared for the manufacture of Pan Masala started manufacturing Gutkha, without following the provisions of Rules 6(6) and Rule 13(2) of Pan Masala packing machines (capacity determination and collection of duty) Rules, 2008, all such machines will be treated as additional machines. ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... gher than Pan Masala (i.e. Rs. 9.25 Lacs). The first show cause notice dated 27-5-2009 was accordingly issued demanding differential duty Rs. 1525000/- on 5 pouch packing machines. The said show cause notice was adjudicated by Additional Commissioner Central Excise Lucknow vide order dated 23-3-2010, wherein demand was confirmed and penalty & redemption fine were imposed. Against this order appellant filled appeal, which was rejected vide Order-in-Appeal dated 29-6-2010. In the mean time Department contended that since the appellant have manufactured Gutkha of retail sale price Rs. 1/- and Pan Masala of retail sale price Rs. 1/- both on said 5 pouch packing machines, they shall be treated as additional machines in terms of Rule 6(6), 8 and 13(2) of Pan Masala Rules, 2008. Second show cause notice dated 7-12-2010 was accordingly the case vide impugned Order-in-Original wherein demand of differential duty amounting to Rs. 4625000/- was confirmed and ordered to be recovered under Rule 9 of Pan Masala Rules, 2008 read with Section 11A(1) of the Act alongwith interest under Section 11AB of the Act. A penalty of Rs. 4625000/- was also imposed under Rule 17(1) of Pan Masala Rules, 2008 re ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 8 of the Rules, 2008". 5.2 By Notification No. 29/2008-C.E. (N.T.), dated 1-7-2008, Central Govt., specified 'Pan Masala' falling under Tariff item No. 2106 90 20 and 'Pan Masala containing Tobacco' i.e. Gutkha falling under Tariff Heading No. 2403 99 90 of the Central Excise Tariff Act, 1985 manufactured with the aid of packing machine and packed in pouches as notified goods for levy and collection of duty of excise under the provisions of Section 3A of the Central Excise Act, 1944. As per Section 3A of Central Excise Act, 1944, the duty leviability is according to the annual capacity of production of notified goods of the factory and duty levied on two different notified goods of same Retail Sale Price can be different. 5.3 In this regard, relevant Pan Masala Rules, 2008 was made effective vide Notification No. 30/2008-C.E. (N.T.), dated 1-7-2008 and in exercise of powers conferred by sub-section (2) & (3) of Section 3A of the Central Excise Act, 1944 states as under : Rule 4 of the Pan Masala Rules, 2008 states that; ''The factor relevant to the production of notified goods shall be the number of packing machines in the factory of the manufacturer." Further Rule 8 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Sale Price of the specified goods and the nature of the notified goods. The duty liability gets changed on change in one of these two parameters or both of them. If there is change in Retail Sale Price, the rate of duty per machine will get changed. If there is difference in the nature of notified goods i.e. if instead of Pan Masala, Gutkha is being manufactured, the rate of duty will get altered. There is another "deeming provision in terms of Notification No. 30/2008, dated 1-7-2008 according to which in case a manufacturer commences manufacturing of goods of new Retail Sale Price during a month on an existing machine it shall be deemed to be an addition in the number of operating packing machine for the month. 'Retail Sale Price' as defined under Notification No. 42/2008 dated 1-7-2008 means; "the maximum price at which the specified goods in packaged form may be sold to the ultimate consumer and includes all taxes, local or otherwise, freight, transport charges, commission payable to dealers and all charges towards advertisement, delivery, packing, forwarding and the like and the price is the sole consideration for sale." A perusal of Notification No. 42/2008, dated 1-7-2008 ..... X X X X Extracts X X X X X X X X Extracts X X X X
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