CBEC's obsession with Pan Masala continues…
Pan Masala Packing Machines (Capacity Determination And Collection of Duty) Rules, 2008 is amended for the second time in three months. In the latest exercise, Rules 6 (1), 6(2), 6(6), 10, 13, 16 and 17 are amended.
Earlier a new manufacturer had to file a declaration with regard to commencement of commercial production fifteen days in advance. Now this time frame is reduced to seven days. Further declarations filed under Rule 6 (1) were hitherto were approved after necessary verification and an order was to be passed by the Assistant/Deputy Commissioner determining the annual capacity within five working days. Now this is reduced to three working days.
Earlier, any addition or deletion in the number of packing machines were to be notified by filing a fresh declaration at least fifteen days in advance to the Assistant/Deputy Commissioner, who will in turn re-determine the annual capacity of production. Now this time frame is reduced to ‘at least three working days'. In case a factory intends to take a break in production for a continuous period of fifteen days or more, prior to this amendment this had to be declared to the jurisdictional Central Excise officers at least seven days in advance. Now the time frame for this declaration is reduced to ‘at least three days'.
This seems to be a trade facilitation measure. Before this amendment, if someone wanted to start a Gutkha Unit in a week, he could not do so as he had to file declaration fifteen days prior to the commencement. It is very easy to start a new unit in Gutka/Pan masala very quickly unlike other factories. Similarly the reduction in time from seven days to three days for capacity determination is also a similar action. The maximum time for declaration filing + determination of capacity was earlier 15 days and now it is reduced to 7 days.
Further, Rule 16 is substituted to provide for the procedure related to permanent closure of the plant and surrendering of the registration certificate. Hitherto it was related to cessation of work on all machines installed in the factory.
Earlier the word permanently was not there and also surrender of registration was not there. So the units could ….start ...stop …start …with the same registration. Now that the registration should be surrendered and considering the COST involved in getting a new registration, this amendment would stop such start… stop …start practice.
Rule 17 (2) is also substituted to deal with unregistered units based on the packing machines found in the premises and the retail sale price of the pouches manufactured from such machines. Further the machines shall be deemed to be operative from July 1, 2008. Prior to this substitution, the duty liability would have been determined as if the goods were not assessed under s. 3A of Central Excise Act, 1944.
Now what will be the implication for the units which were unregistered and merrily manufacturing and clearing pan masala prior to July 1, 2008? At least the earlier rule dealt with this situation as if those goods are not assessed in terms of s. 3A and there was no ambiguity in dealing with demand of duty for production prior to July 1, 2008. In the amended rule, deeming the existence of packing machines from July 1, 2008 for the purpose of calculation of duty does not bring clarity for demand of duty for clearances effected prior to July 1, 2008.
May be the revenue's experience in case of evaders proved that the duty payable under normal manner was less than under the capacity determination and it was wise to evade than to pay duty under these rules. That's how this amendment must have been made.
Notification No. dated October 20, 2008