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Judgment
We have heard Sri B.K. Singh Raghuvanshi, the learned counsel for the appellant. Central Excise duty is leviable on all excisable goods under Section 3 of the Central Excise Act, 1944. Under Section 3A(1) of the Act, excise duty is chargeable on such goods based on annual capacity of production in the factory. In exercise of the powers under Section 3A(1) of the Central Exercise Act, 1944 the Central Government has notified that pan masala and also pan masala containing tobacco packed in retail packs could be levied for duty under Section 3A. Notification No. 30/2008-C.E. (N.T.) , dated 1-7-2008 was issued framing the Central Excise (Determination of Retail Sale Price of Excisable Goods) Rules, 2008 (hereinunder referred to ''PMPM Rules''). Rule 4 provides that the relevant factor to the production of notified goods shall be the number of packing machines in the factory of the manufacturer. Rule 5 specifies the deemed quantity of notified goods to be produced having a retail price as specified in column 2 of the Table and the number of pouches to be produced in a month per machine. The deemed production per operating machines per month specified in Rule 5 is in respect of retail sale price/different RSP slabs. According to the Table given in Rule 5, Serial No. 1 of column No. 2 specifies the retail sale price per pouch as "up to Rs. 1.00". Column 3 indicates that the number of pouches per operating packing machine per month for retail sale price up to Rs. 1.00 would be 37,44,000/-. The Table accordingly prescribes different retail sale price per pouch, namely, retail sale price up to Rs. 1.00, from Rs. 1.01 to Rs. 1.50, from Rs. 1.51 to Rs. 2, from Rs. 2.01 and so forth. Rule 5 also provides that if the machines are multiple track or multiple line packing machines, each track or line shall be treated as 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. From the aforesaid, it is clear that when a single line or single track packing machines pertains pan masala pouches having a retail sale price (RSP) up to Rs. 1.00 its deemed production would be 37,44,000 per month per machine.
In the instant case, the assessee during the month of June, 2009, July, 2009, August, 2009, October, 2009 and November, 2009 filed the declaration as required under Rule 6 declaring its intention to manufacture certain kinds of pan masala pouches. The returns were also filed for these months which showed manufacture/clearances of pan masala with tobacco having RSP of 50 p. On the basis of this information provided by the assessee, the Department inferred that during the each of these months the assessee used the installed machines for manufacturing of pan masala with tobacco of having a retail sale price of Rs. 1 per pouch as well as having a new retail sale price of Rs. 0.50 and, on this basis, invoked the first proviso to Rule 8 of the ''PMPM Rules''. For facility, the said provision, Rule 8 and the provisos are extracted hereunder:-
Rule 8. Alteration in number of operating packing machines. - In case of addition or installation or removal or uninstallation of a packing machine in the factory during the month, the number of operating packing machine for the month shall be taken as the maximum number of packing machines installed on any day during the month.
Provided that in case a manufacturer commences manufacturing of goods of a new retail sale price 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:
Provided further that in case of non-working of any installed packing machine during the month, for any reason whatsoever, the same shall be deemed to be operating packing machine for the month.
On the basis of the first proviso, the Department held that the assessees had also commenced manufacturing of the goods of a new retail sale price, i.e., 50 per pouch on an existing machine and, therefore, it would be deemed to be an addition in the number of operating packing machine for the month in question and, accordingly, levied duty. The assessees being aggrieved filed an appeal which was set aside by the Tribunal by an order dated 18 March, 2015 [2015 (329) E.L.T. 680 (Tri. - Del.)]. The Department being aggrieved has filed the present appeal.
Having heard the learned counsel for the appellant, we find that the basic issue for consideration is, as to what is the "new retail sale price". A new retail sale price is the retail sale price which belongs to a new RSP slab as contemplated in Rule 5 of the Rules. The Table under Rule 5 specifies different slabs of retail sale price, i.e., under Serial No. 1 a pan masala or a pan masala with tobacco manufactured having a retail sale price up to Rs. 1, the number of pouches on which Central Excise Duty would be levied would be 37,44,000. The retail sale price has been denied under Rule 2(f) which is extracted hereunder:-
(f) "retail sale price" means retail sale price as specified by the Central Government, in Explanation 3 to the opening paragraph in the Notification of the Government of India in the Ministry of Finance (Department of Revenue), No. 42/2008-C.E., dated 1st July, 2008;
A perusal of Rule 2(f) indicates that the retail sale price would be as specified by the Central Government in Explanation 3 to the opening paragraph of the Notification of the Government of India dated 1st July, 2008. The 1st paragraph of the Central Government Notification dated 1st July, 2008 is nothing else but a reproduction of the Table specified in Rule 5. Explanation 3 given in paragraph 1 of the Notification dated 1 July, 2008 is, however, extracted hereunder:-
Explanation 3. - For the purposes of this notification, "retail sale price" 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 the sale.
The aforesaid explanation makes it apparently clear that the retail sale price means the maximum price at which the specified goods in packaged form may be sold to the ultimate consumer.
In the light of the aforesaid, the expression "new retail sale price" has to be understood as contemplated under Rule 5 which specifies the deemed production per operating machine per month and this deemed production is specified for different RSP slabs. The rate of duty per machine specified in the Notification of 1st July, 2008 is on its production, namely, if pouches up to Rs. 1.00 is manufactured, its deemed production would be 37,44,000 pouches.
Therefore, in our opinion, even if the machine manufactures in a particular month pan masala or pan masala with tobacco pouches of 50.0 and Rs. 1.00, its deemed production would still be 37,44,000 pouches on which duty would be leviable. The proviso to Rule 8 would not be applicable nor can there be a supposition that there would be deemed to be an addition in the number of operating packing machines for the month in question on the strength that a new retail sale price has come into existence on an existing manufacturing machine.
In our view, for the purpose of Rule 5, pouches within a particular RSP slab would be the same for the purpose of determining the deemed production per month. When a RSP which is under a different slab, only then it would be treated to be a new retail sale price. In the instant case, there is no dispute that the assessee had ever manufactured pan masala with tobacco in pouches above Rs. 1.00, and, therefore, maximum deemed production as specified in Column 3 to the Table in Rule 5 could not exceed the figure indicated thereunder. In the light of the aforesaid, we do not find any error in the impugned order. No substantial question of law arises for consideration. The appeal fails and is dismissed.