Highest retail sale price basis governs monthly duty when one machine produces pouches at different prices.

Rule 8 of the Pan Masala Packing Machines Rules, 2008 was applied to a machine used during the same month for pouches bearing different retail sale prices, and the retrospective clarification in Section 101 of the Finance Act, 2014 stated that duty is payable at the rate linked to the highest retail sale price for the whole month. On the admitted facts, duty had already been discharged on that higher retail sale price basis for the relevant machines. The demand was therefore unsustainable and the issue was resolved in favour of the assessee.

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Issues: Whether duty could be demanded under Rule 8 of the Pan Masala Packing Machines (Capacity Determination and Collection of Duty) Rules, 2008 when machines already assessed at a higher retail sale price were used during part of the month to manufacture pouches of a lower retail sale price.

Analysis: Rule 8, as applicable during the relevant period, treated commencement of a new retail sale price on an existing machine during the month as an addition to the number of operating packing machines. The retrospective amendment introduced by Section 101 of the Finance Act, 2014 clarified that where an operating machine is used to produce pouches of different retail sale prices during a month, duty is payable at the rate applicable to the highest retail sale price for the whole month. The same question had already been answered in favour of the assessee in the cited Tribunal decision, and that view had been upheld by the High Court. On the admitted facts, the assessee had already discharged duty on the basis of the higher retail sale price for the relevant machines.

Conclusion: The demand was unsustainable; the issue was decided in favour of the assessee.

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