Following topology and configuration being used:
CE1 [port1] <-> [port1] PE1 [port 2] <-> [port2] PE2 [port 1] <-> [port1] CE2
configure vman vm200 add ports 1 cep cvid 300
configure l2vpn vpls vpls-test add service vman vm300
Packets on egress of ports 1 of PE1 and PE2 don't contain 802.1q tag. CVID tag being stripped on PE routers even before tunneling.
Packet capture from port 2 of PE1: