2017 (7) TMI 641 - AT - Central Excise

Clandestine manufacture - Pan Masala Packing Machine - sealing of machinery without physical removal - Revenue was of the view that the a single packing machine weighs about 200 kg, was having wheels and was required to be physically removed from the factory. As this was not done and the machine(s) was only sealed and removed to a separate room in the factory thus respondent was liable to pay duty on all such machines including the sealed machines, available in the factory - Held that - it is not disputed that the un-installation and sealing of the machines was in such a manner that it rendered the machines non-operative. It was the decision of the proper officer under the Rules to decide as to what was feasible in the facts and circumstances at given time or specific hour. On being satisfied the proper officer did not remove the machine from the factory and instead removed them to another room after packing in duly sealed condition. He further took notice of the fact that such machines are not easily movable, need a crane to move the machines - demand set aside - appeal dismissed - decided against Revenue.

Summary

Issues:
Revenue appeal against determination of duty under Pan Masala Packing Machine Rules 2008 for June & July 2009.

Analysis:
The appeal was filed by Revenue against the impugned order in appeal where the Commissioner upheld the duty determination for June & July 2009 under Pan Masala Packing Machine Rules 2008. The respondent-assessee intimated the revenue about the number of packing machines available in the factory for each month. For June, out of 96 machines, 81 were to be operated, and duty was determined accordingly. Similarly, for July, out of 95 machines, 68 were to be used for manufacturing Gutkha. The Revenue contended that sealed machines were not physically removed, thus duty should be paid for all machines. However, the Commissioner rejected this argument, stating that sealed machines were properly sealed and removed to a separate room, making them non-operative. The duty was fixed based on the number of operating machines as per the rules.

The Commissioner noted that none of the sealed machines were found running or reinstalled, and there was no foul play alleged. Rule 7 of Pan Masala Packing Machines Rules 2008 specifies that duty is calculated based on the number of operating packing machines in the factory. The machines were uninstalled and sealed in a way that made them non-operative. The decision to not physically remove the machines was made by the proper officer based on feasibility and circumstances. It was observed that the machines were not easily movable and required a crane for movement. The Commissioner found no error in the impugned order and dismissed the appeal by Revenue.

In the final judgment, the Tribunal found that no new grounds were raised, and the Revenue's arguments were deemed untenable. The impugned order by the Commissioner was upheld, and the appeal by Revenue was dismissed.