TaxTMI 
TaxTMI 
2022 (11) TMI 1537
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....CN date Demand in Rs E/967/2011 04-05/M-I/2011 dated 3.3.2011 01.11.2010 21.02.2011 7993296 22266667 E/863/2012 53-54/M-I/2011 dated 29.2.2012 04.08.2009 28.01.2010 15591121 18517729 Total 64368813 1.2 As the issue and facts are commons, the appeals are being taken up together for hearing and disposal. For ease we refer to the order in the appeal No E/863/2012. "ORDER 26. In view of above discussion and findings, I pass the following order:- i) I confirm the duty amounting to Rs. 1,55,91,121/- (Rupees one crore fifty five lakhs ninety one thousand one hundred twenty one only) for the period 01.07.2008 to 31.12.2008 demanded in show cause notice dated 04.08.2009 and amounting to Rs. 1,85,17,729/- (Rupees one crore eighty five lakhs seventeen thousand seven hundred twenty nine only) for the period 01.01.2009 to 30.09.2009 demanded in show cause notice dated 28.01.2010, on pan masala manufactured and cleared by M/s. Godfrey Philips India Ltd., Sahar Road, Chakala, Andheri East, Mumbai- 400 093, under the provision of notification No. 42/2008-C.E. dated 01.07.2008 read with Pan Masala Packing Machines (C....
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....ellant continued to follow the practice of payment of duty on advalorem basis. 2.4 Vide Notification No. 29/2008-CE(NT) dated 1.7.2008, pan masala was specified as notified goods falling under the Tariff item 21069020 and 29039990 to the first schedule of the Tariff with the condition that it is manufactured with the aid of packing machine and packed in pouches, as notified goods, on which there shall be levied and collected duty of excise in accordance with the provisions of Section 3A (compounded levy). Notification of even date No. 30/2008-CE (NT) was also issued under Section 3A(2) and (3) to notify the Pan Masala Packing Machines (Capacity Determination and Collection of Duty) Rules, 2008. Notification No. 42/2008-CE notified in exercise the powers under Section 3A(3) of the Central Excise Act notified the rate on the unit of production for pan masala/gutkha manufactured with the aid of packing machine and packed in pouches, as per RSP as mentioned in the table, the rate of duty specified in the corresponding entry in column 3 and 4 of the Table 1. Notification No 44/2008-CE dated 16.07.2008 rescinded the Notification No 38/2007-CE dated 19.12.2007. As consequence the manuf....
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.... vide the order in appeal referred in para 1 above. 2.8 Aggrieved by the impugned orders appellant have preferred these appeals. 3.1 We have heard Shri Gajendra Jain with Ms. Payal Nahar, Advocates for the appellant and Shri Dhirendra Kumar, Joint Commissioner, Authorized Representative for the revenue. 3.2 Arguing for the appellant learned counsel submits that: ➢ Two factors which are sine qua non to attract duty in terms of Notification No 42/2008-CE i.e. o Manufacture with the aid of packing machines o Packed in pouches meant for the sale for a price to be declared as retail sale price Are absent in present case and hence the demand made in terms of the said Notification is not applicable. ➢ Borrowing tariff value from a Notification issued under Section 3 for the purpose of levying duty under Section 3A of the Central Excise Act, 1944 is not permissible. ➢ Notification No 42/2008_CE is self contained code, o revenue could not have resorted to Pan masala Rules, 2008 for computing RSP. o It applies to goods manufactured with the aid of packing machines and do not apply to goods deemed to ....
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....s issued in this regard. This being the case, the issue to be examined is whether M/s GPIL were liable to pay duty of excise in accordance with the provisions of section 3A of the Act i.e. based on quantity deemed to be produced by use of packing machine/s per month read with relevant notifications and rules framed in this regard. 19. M/s GPIL in their submissions detailed herein above have contended that (i) notices were issued based on incorrect understanding of facts and without any enquiry being conducted; (ii) production based levy only applicable if a manufacturer undertook commercial production; (iii) compounded levy scheme not applicable on hand filled pan masala pouches produced in pilot test plant, as the said scheme is applicable only to pan masala manufactured with the aid of packing machine and packed in pouches; (iv) 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; (v) section 3A of the Act being an anti abuse provisions, the said provisions and the relevant notifications issued and rules....
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....Further, after pan masala was specified as notified goods vide notification No. 29/2008- C.E.(N.T.) dated 01.07.2008 and the Pan Masala Packing Machines (Capacity Determination and Collection of Duty) Rules, 2008 were introduced vide notification No. 30/2008 C.E.(N.T.) dated 01.07.2008, a manufacturer of pan masala was required to file a declaration under rule 6 of the Pan Masala Packing Machines (Capacity Determination and Collection of Duty) Rules, 2008 within ten days of the said rules, coming into force. 21. As stated herein above, one packing machine was installed is an undisputed fact. M/s. GPIL, after introduction of the Pan Masala Packing Machines (Capacity Determination And Collection of Duty) Rules, 2008, had in their letter dated 01.12.2008 stated that they had installed one pan masala packing machine for packing samples. The revenue authorities, after pan masala was notified as specified goods, had requested M/s GPIL to pay central excise duty in terms of notification No. 42/2008-C.E. dated 01.07.2008 and comply with the rules laid down under the Pan Masala Packing Machines (Capacity Determination and Collection of Duty) Rules, 2008. However, in spite of reques....
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....asala shall file a declaration under rule 6 of the Pan Masala Packing Machines (Capacity Determination And Collection of Duty) Rules, 2008 in Form 1, declaring therein the number of packing machines available in factory, number of packing machines installed, number of packing machines operational, etc., within ten days of the said rules coming into force i.e. before 10.07.2008. In the instant case, M/s GPIL were engaged in the manufacturer of pan masala well before the said rules came into force and the packing machine was already available/installed in the factory is on record. Therefore, they were required to file the declaration on or before 10.07.2008 which they failed to file. I find that M/s GPIL was an existing unit already engaged in the manufacture of with the use of available / installed packing machine since March, 2008 hence, with the introduction of the said rules it was obligatory for them to file a declaration to that effect on or before 10.07.2007. I find that the option for filing of such declaration at least 15 days prior to the commencement of commercial production of notified goods was applicable to new manufacturers of pan masala. M/s GPIL being engaged in the ....
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....entral Excise or Assistant Commissioner of Central Excise, as the case may be, as per the provisions of rule 6(2) and other provisions of the Pan Masala Packing Machines (Capacity Determination and Collection of Duty) Rules, 2008 on receipt of the declaration filed by the manufacturer in terms of rule 6(1) of the said rules. As discussed hereinabove, no declaration was filed by M/s GPIL even though mandatorily required, the annual capacity of production could not be determined by the appropriate authority. In view of the facts and circumstances of the instant case, this contention of M/s GPIL is not found tenable. 24. M/s GPIL have also contended that section 3A of the Central Excise Act,. 1944 being a anti abuse provision, the said section and notifications issued thereunder ought to be read in the context of the object and scope of the provisions of section 3A of the Act and excise liability is to be restricted to duty payable on actual quantity manufactured. I observe in this context that section 3A reads as under:- ..... The provision of section 3A(1) starts with the words " Notwithstanding anything contained in section 3 ". These words make it clear ....
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....d that M/s GPIL are liable for penal action under rule 17 (1) of the Pan Masala Packing Machines (Capacity Determination and Collection of Duty) Rules, 2008." 4.3 The text of the Section 3A in terms of which the Compounded Levy Scheme has been made is reproduced below: Section 3A. Power of Central Government to charge excise duty on the basis of capacity of production in respect of notified goods. - (1) Notwithstanding anything contained in section 3, where the Central Government, having regard to the nature of the process of manufacture or production of excisable goods of any specified description, the extent of evasion of duty in regard to such goods or such other factors as may be relevant, is of the opinion that it is necessary to safeguard the interest of revenue, specify, by notification in the Official Gazette, such goods as notified goods and there shall be levied and collected duty of excise on such goods in accordance with the provisions of this section. (2) Where a notification is issued under sub-section (1), the Central Government may, by rules, - (a) provide the manner for determination of the annual capacity of production of the....
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.....), read with any notification for the time being in force. Explanation 2. - For the purposes of this section, the expression "hundred per cent. export-oriented undertaking" shall have the meaning assigned to it in section 3. 4.4 In terms of the powers vested under this section Central Government issued Notification No 29/2008-CE (NT) which read as follows: "In exercise of the powers conferred by sub-section (1) of section 3A of the Central Excise Act, 1944 (1 of 1944), the Central Government hereby specifies,- (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, manufactured with the aid of packing machine and packed in pouches as notified goods, on which there shall be levied and collected duty of excise in accordance with the provisions of the said section 3A. 2. This notification shall come into force on the 1st July, 2008. Explanation. - For the purposes ....
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....3) of the said Table : Table Sl. No. Retail sale price (per pouch) Number of pouches per operating packing machine per month 1 2 3 1 Up to Rs. 1.00 37,44,000 2 From Rs. 1.01 to Rs. 1.50 37,44,000 3 From Rs. 1.51 to Rs. 2.00 35,56,800 4 From Rs. 2.01 to Rs. 3.00 35,56,800 5 From Rs. 3.01 to Rs. 4.00 34,44,480 6 From Rs. 4.01 to Rs. 5.00 34,44,480 7 From Rs. 5.01 to Rs. 6.00 34,44,480 8 Above Rs.6.00 33,69,600 Explanation . - For the purposes of this rule, if there are multiple track or multiple line packing machine which besides packing the notified goods in pouches, perform additional processes 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, etc., two such tracks or lines shall be deemed to be one individual packing machine for the purposes of calculation of the number of pouches per operating packing machine per month. 6. Declaration to be filed by the manufacturer. - 1) A manufacturer of notified goods shall, immediately on coming into force of these rules, and, in....
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....he annual capacity of production of the factory within five working days in accordance with the provisions of these rules: Provided that the Deputy Commissioner of Central Excise or the Assistant Commissioner of Central Excise, as the case maybe, may direct for modifications in the plan or details of the part or section of the factory premises intended to be used by the manufacturer for manufacture of notified goods of different retail sale prices, as he thinks proper, for effective segregation of the parts or sections of the premises and the machines to be used in such parts or sections before granting the approval: Provided further that if the manufacturer does not receive the approval in respect of his declaration within the said period of five working days, the approval shall be deemed to have been granted subject to the modifications, if any, which the Deputy Commissioner of Central Excise or the Assistant Commissioner of Central Excise, as the case may be, may communicate later on but not later than thirty days of filing of the declaration. 3) The annual capacity of production shall be calculated by application of the appropriate quantity that is de....
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....f 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 fails 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 11AB of the Acton the outstanding amount, for the period starting with the first day after due date till the date of actual payment of the outstanding amount: Provided also that in case of increase in the number of operating packing 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 following month: Provided also that in case a manufacturer permanently discontinues manufacturing of goods of existing retail sale price or commences manufacturing of goods of a new retail sale price during the month, the monthly duty payable shall....
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....tified goods on the package of such goods: Provided that if the manufacturer fails to declare the retail sale price before removing the goods from the place of manufacture or declares a retail sale price which is not the retail sale price as required to be declared under the provisions of these rules or tampers with, obliterates or alters the retail sale price declared on the package of such goods after their removal from the place of manufacture, then, such goods shall be liable to confiscation and the retail sale price of such goods shall be ascertained in the manner specified in these rules and such price shall be deemed to be the retail sale price for the purposes of these rules. 12. Determination of retail sale price in case of non- declaration, obliteration, tampering, etc.- Where a manufacturer removes the notified goods in the manner and circumstances specified in proviso to rule 11, then, the retail sale price of such goods shall be ascertained by the Deputy Commissioner of Central Excise or the Assistant Commissioner of Central Excise, as the case may be, in the following manner, namely:- (i) if the manufacturer has manufactured and rem....
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....eferred to as specified goods),manufactured with the aid of packing machine and packed in pouches having retail sale prices as specified in column (2) ofTable-1 below, the rates of duty specified in the corresponding entry in column (3) or column(4) of the said Table, as the case may be: Table-1 S.No. Retail sale price (per pouch) Rate of duty per packing machine per month(Rs. in lakh) Pan masala Pan masala containing tobacco 1 2 3 4 1 Up to Rs. 1.00 9.25 12.50 2 From Rs. 1.01 to Rs. 1.50 14 19 3 From Rs. 1.51 to Rs. 2.00 18 24 4 From Rs. 2.01 to Rs. 3.00 26 36 5 From Rs. 3.01 to Rs. 4.00 34 47 6 From Rs. 4.01 to Rs. 5.00 43 59 7 From Rs. 5.01 to Rs. 6.00 51 70 8 Above Rs. 6.00 50 + 8.36 * (P -6), where P represents retail sale price of the pouch 69 + 11.45 * (P - 6), where P represents retail sale price of the pouch Illustration. - The rate of duty per packing machine per month for a gutkha pouch having retail sale price of Rs. 8.00 (i.e. 'P') shall be = Rs. 69 + 11.45*(8-6) lakhs= Rs. 91.90 lakhs Expla....
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....eviable 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 the ratios specified in the Table-2 below. Table-2 Sr.No. Duty Duty ratio for pan masala Duty ratio for pan masala containing tobacco 1 The duty leviable under the Central Excise Act, 1944 0.3161 0.7355 2 2 The additional duty of excise leviable under section 85 of the Finance Act, 2005 0.1355 0.0883 3 National Calamity Contingent Duty leviable under section 136 of the Finance Act, 2001 0.5193 0.1471 4 Education Cess leviable under section 91 of the Finance Act, 2004 0.0194 0.0194 5 Secondary and Higher Education Cess leviable under section 136 of the Finance Act, 2007 0.0097 0.0097 4.8 Further from the basic scheme as of levy as outlined by the above section 3A and the notifications issued thereunder, it is evident that factor of production have been specified as number of packing machines in the factory of the manufacturer as per Rule 4, and the unit of production as per the Rule 5 is based on the retail sale pr....
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....f 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 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. 4.10 We also take note of the decision referred to by the counsel of appellant holding as follows in the support of the contention PNB Finance [2008 (13) SCC 94] 17. As regards applicability of Section 45 is concerned, three tests are required to be applied. In this case, Section 45 applies. There is no dispute on that point. The first test is that the charging section and the computation provisions are inextricably linked. The charging section and the computation provisions together constituted an integrated Code. Therefore, where the computation provisions cannot apply, it is evident that such a case was not intended to fall within the charging section, which, in the present case, is Section 45. That section contemplates that any surplus accruin....
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....936 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 with the submission made on behalf of the appellants that the provisions of 1936 Act are applicable only to place-related entertainment. In other words, the provisions of the 1936 Act cover an entertainment which takes place in a specified physical location to which persons are admitted on payment of some charge as defined under clause (d) of section 2 of the 1936 Act. The legislative history and the amendments introduced in the 1936 Act also show that it was how the scheme of the 1936 Act was viewed by the State itself. It was earlier found that the provisions of the 1936 Act were inadequate to bring shows by video cassette recorder or video cassette and player cable T.V. operations within the taxing net and hence, the legislature considered it necessary to amend the 1936 Act and to insert section 3-A and section 3- B respectively with effect from May 1, 1999 and April 1, 2001. In this regard, i....
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....ng 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 view our aforesaid observations. ➢ Ashok & Co Pan Bahar Ltd. [2018 (359) ELT 329 (T-Del)], in this case following was specifically held in para 6 and 7 6. First, we consider the demand attributable to Pan Masala packed manually in tins. The appellant has cited the C.B.E. & C. circular dated 4-8-2008 in which it has been clarified that the Compounded Levy Scheme notified under Section 3A will not be applicable to Pan Masala packed in tin containers manually. Such scheme is specifically notified only for Pan Masala packed in FFS machines. On perusal of the C.B.E. & C. circular the above fact is confirmed. Consequently the demand of duty on Pan Masala packed in tin containers cannot be sustained and is set aside. 7. Next, we turn to the demand of duty made on the basis of pouch packing machines installed in the factory ....