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M/s. Trimurti Fragrance (P) Ltd Versus. C.C.E. & S.T. Kanpur

2015 (329) E.L.T. 680 (Tri. - Del.) - Recovery of duty - Rule 8 of the PMPM Rules - as per revenue the appellant have used the machines installed for the manufacture of the pouches of MRP of 50 Paisa also in addition to the pouches of MRP of Rs. One, it would be treated as addition of new machine - required to pay duty on 49 machines, 47 machines 47 machines, 61 machines and 57 machines respectively at the rate applicable for the MRP of 50 Paisa per pouch, in addition to the duty already paid by .....

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6th proviso to Rule 9 and 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 inasmuch as situation at the rate applicable to the highest RSP.

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on that machine, pouches of different RSPs had been produced. Moreover, it is well settled principle of the interpretation of the statute that different provisions of a statute must be construed harmoniously and, therefore, in this case, 1st proviso to Rule 8 of the PMPM Rules cannot be interprested so as to result in levy of duty on the quantity which is more than the deemed production per machine per month as specified in Rule 5. When for the purpose of rule 5, in case of a packing machine ma .....

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cts leading to fulfilling of this appeal are, in brief, as under:- 1.1 The appellant is a manufacturer of Pan Masala containing Tobaco, Called Gutkha chargeable to central excise duty under sub heading 24039990 of the central excise tariff. They were manufacturing the Gutkha in retail pouches of the MRP of Rs. One under brand name Shikhar 1000 and Shikhar and of MRP of 50 Paisa under brand Harpal. The appellant were discharging duty liability under Pan Masala Packing machines (capacity determina .....

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achines, 47 machines, 61 machines and 51 machines respectively, all for manufacture of the Gutkha at MRP of Rs. One per Pouch. However, on scrutiny of their returns, it was found that during these months they had also manufactured cleared the Gutkha of MRP of 50 Paisa per pouch also and during each of these months, they had paid duty on the Gutkha pouches cleared by them at the per month per machines rate applicable for the MRP of Rs. One. 1.2. Rule 8 of the PMPM Rules provides that:- (a) In cas .....

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case during each of the five months to which this dispute pertain, there was no addition of new machines by installation of new machines or reduction in the number of packing machines by un-installation of packing machines. The Department however, invoking first proviso to Rule 8 of the PMPM Rules has taken stand that since during each of these months, the appellant have used the machines installed for the manufacture of the pouches of MRP of 50 Paisa also in addition to the pouches of MRP of R .....

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onth as specified in notification no. 42/08-CE is the same for the MRP of Rs. One per pouch and 50 Paisa per pouch, the appellant have been asked to pay the additional duty of the same amount as the amount of duty which they had earlier paid. For this purpose, the Department has presumed that each of the machine installed in the appellants factory during months of June 2009, July 2009, August 2009, October 2009 and November 2009 had been used for manufacture of Gutkha pouches of the MRP of Rs. .....

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Kanpur Vide order in original dated 31.07.2013 by which the above mentioned duty demand was confirmed against the appellant along with interest thereon under section 11AB and beside this, penalty of equal amount was imposed on them under Rule 17 of the PMPM Rules 2008 read with Rule 25 of the Central Excise Rules 2002. Against this order of the Commissioner this appeal has been filed. 2. Heard both the sides. 3. Ms. Seema Jain, Advocate, the ld. Counsel for the appellant made the following submi .....

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his proviso applies only for manufacture and not for in respect of clearance. (2) During June, 2009, July, 2009, August, 2009 and October, 2009, the appellant manufactured Gutkha of RSP of 50 Paise per pouch which had not been declared by them in their declarations for these months. In this situation, Sixth Proviso to Rule 9 of PMPM Rules would apply and accordingly, the appellant company would have to pay duty at the rate applicable to the goods of the higher RSP so manufactured by them in resp .....

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stood in the same sense in which it is understood in the context of Rule 5. Rule 5 specifies the deemed production of Gutkha pouches per operating machine per month according to the various retail sale price (RSP) slabs - upto ₹ 1, from ₹ 1.01 to ₹ 1.50, from ₹ 1.51 to ₹ 2 and above ₹ 6. When for the purpose of determining deemed production per operating machine per month, all the RSPs of upto ₹ 1, are treated as one RSP, for the purpose of Rule 8 .....

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d the quantity of gutka of RSP of 50 paise produced in the months of August and October is less than the deemed production of one machine as per Rule 5. However, duty has been demanded on all the installed machines- 49 machines in June, 2009, 47 machines in July 2009, 47 machines in August, 2009 and 61 machines in October, 2009 implying that the appellant manufactured Gutkha of RSP of ₹ 1 as well as ₹ 0.50 on all the installed machines. This is not and cannot be the case, as the mach .....

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of the Central Excise Act and therefore, the element of mensrea is mandatory. The appellant had no intention to evade the duty as there was no suppression of any fact from the department and the demand show cause notice has been issued on the basis of the declarations made in E.R.- 1 Returns filed by the appellant. 4. Shri Pramod Kumar, the ld JCDR, defended the impugned order by reiterating the findings of the Commissioner and pleaded that if during a particular month, the Gutkha of pouches of .....

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ons filed by them in respect of these months under Rule 6 of the PMPM Rules had operated 49 machines, 47 machines, 47 machines 61 machines and 51 machines respectively and on each of these machines they were to manufacture the Gutkha pouches of RSP of ₹ 1. ER-I Returns for these months they also showed manufacture and clearances of the Gutkha of RSP of ₹ 0.50 pc. On this basis department has inferred that during each of these months, the appellant have used each of the installed mach .....

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e price. According to the appellant, a new retail sale price is the retail sale price which belongs to a mew RSP slab i.e. the RSP slab, after than the RSP slab to which existing retail sale price belongs. Thus, according to the appellant if a manufacturer is manufacturing the Gutkha of the RSP of ₹ 1, the RSP of ₹ 0.50 Pc. cannot be treated as new RSP, as in terms of Rule 5, the deemed production per operating packing machine per month for RSP upto ₹ 1 is 37,44,000/- and the .....

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he Central Excise duty is leviable on all the excisable goods excluding the goods produced or manufactured in a special economic zone, which are produced or manufactured in India and at the rates specified in first schedule to the Central Excise Tariff Act. However, under section 3 A (1) of the Act the Central Govt. has power to notify certain goods, having regard to the nature of the process of their manufacture or production, the extent of evasion of duty in respect of such goods and the neces .....

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he pan masala and also pan masala containing tobacco (Gutkha) packed in retail packs for levy of duty under section 3A and, accordingly, under Notification No.30/08-CE (NT) dated 01.07.08 has framed PMPM Rules. Rule 4 of the PMPM Rules states that the relevant factor to the production of the notified goods shall be the packing machines in the factory of the manufacture. Rule 5 of the PMPM Rules specifies the deemed production of pouches per operating machines per month for different retail sale .....

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one machine unless the packing machines besides packing the notified goods in pouches also perform additional process 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. Thus, when the single line/single track packing machines manufactures Gutkha pouches of RSP upto ₹ 1, its deemed production would be 37,44,000/- and similarly, if a machine manufactures Gutkha pouches of RSP from Rs.1.51 to  .....

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t, 1944, Additional excise duty leviable under section 85 of the Finance Act, 2005, National Calamity Contingent Duty leviable under section 136 of the Finance Act, 2001, Education CESS leviable under Section 91 of the Finance Act, 2004 and Secondary and Higher Education CESS leviable under section 136 of the Finance Act, 2007. In terms of Rule 7 of the PMPM Rules, the duty payable shall be calculated by the application of the appropriate rate of duty specified in the Notification No.42/2008-CE .....

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of a new RSP during the month on an existing machine, it shall be deemed to be an addition in the number of operating packing machine for the month. The question as to what is a new retail sale price. 8.1 In our view the expression new retail sale price has to be understood in the sense in which it is understood in Rule 5. Rule 5 of the PMPM Rules, as explained above, specifies the deemed production per operating machine per month and this deemed production is specified for different RSP sla .....

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hine manufactures in a month the Gutkha pouches of the 25 Paisa, 50 Paisa, 75 Paisa and ₹ 1, its deemed production would be ₹ 37,47,000/- and not ₹ 37,44,000/- multiplied by 4. Thus, for the purpose of Rule 5 all the RSPs within a particular RSP slab are the same for the purpose of determining deemed production per month, and it is only an RSP which is different from a particular RSP slab which has to be treated as a new RSP as it would result in change of the deemed production .....

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machine per month as specified in Rue 5. 9. It is also seen that in terms of Sixth Proviso to Rule 9 of the PMPM Rules, in case it is found that a manufacturer has manufactured goods of the RSPs which have not been declared by him in accordance with the provisions of these Rules, the duty at the rate applicable to the goods of the highest RSP, so manufacture by him, shall be payable by him in respect of all the packing machines operated by him for the period during which such manufacturing took .....

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, and in this case there is no dispute that the appellant has paid duty at the rate applicable for the RSP of ₹ 1. Thus in terms of Sixth proviso to Rule 9, there would be no duty liability. The duty liability would have arisen if against the declared RSP of ₹ 1 the appellant had also used the machines for manufacture of the Gutkha pouches of RSP of ₹ 3, but this is not the case here. 10. It is also seen that by section 101 of the Finance Act, 2014, the First Proviso to Rule 8 .....

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nufacturers 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 amendemnt is in accordance with the 6th proviso to Rule 9 and 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 o .....

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