2018 (2) TMI 1969 - AT - Central Excise

Valuation - sealing of machinery and closure of operation - case of Revenue is that once a machine is installed, it shall be determined to be an operating packing machine - HELD THAT - We are not in position to appreciate the argument of Revenue that once a machine is installed, it shall be treated as operational machine even if the machine was sealed in such a manner that it became unoperative. We do not find any merit in the grounds raised by Revenue. Appeal dismissed - decided against Revenue.

Summary

Issues:
Determining the number of operational packing machines for duty calculation.

Analysis:
The appeal was filed by Revenue against the Order-in-Appeal passed by the Commissioner (Appeals) concerning the determination of the annual production capacity of Pan Masala and Gutkha by the respondents. The Commissioner (Appeals) modified the original order, which considered eight machines as installed, to only five machines being operational for duty calculation. The Commissioner found that on the effective date of the rules, only five machines were operational as three machines were sealed and uninstalled. Revenue contended that once a machine is installed, it should be considered operational, regardless of being sealed. The Tribunal analyzed the arguments and upheld the Commissioner's decision. The Tribunal stated that a machine cannot be considered operational if it is sealed in a manner that renders it unoperative. Therefore, the appeal by Revenue was rejected, and the respondent was entitled to consequential relief as per law.

This judgment primarily revolves around the interpretation of the term "operational machine" concerning the installation and sealing of packing machines. The Tribunal clarified that a machine should not be considered operational if it is sealed in a manner that renders it unoperative. The decision emphasizes the importance of considering the practical functionality of machines rather than just their physical installation status for duty calculation purposes. The judgment highlights the significance of adhering to specific operational criteria rather than solely relying on the technical installation of machinery in such cases.

In conclusion, the Tribunal's decision underscores the necessity of assessing the operational status of machinery based on practical functionality rather than mere installation. The judgment provides clarity on the determination of duty calculation concerning the operational status of packing machines, emphasizing the importance of considering the actual operational capacity of machinery for accurate duty assessment.