2017 (8) TMI 153 - AT - Central Excise

Speed of the machines which is manufacturing Pan Masala - monthly capacity of production of Chewing Tobacco - Held that - It is admitted position at the time of visit of Chartered Engineer the speed of machine was found 696.5 pouches per minute. These facts are not in dispute. The Chartered Engineer has opined that the speed of machines can be increased and depend on the Servo Motor. The observations made by the Chartered Engineer that the capacity of each machine could be operated to run at a speed of beyond 1000 pouches per minute provided the locking i.e. presetting for maximum number of pouches which the machines could be produced to higher value by the company or manufacture of the machines through password and logical sequencing is without any positive evidence. Moreover, if the speed of the machines is increased in that situation that can be examined by the Authorities from time to time. The maximum speed at which machine declared by the appellant in Form-I and Form-II can operate in terms of Rule 6 of the Rules is about 696.5 pouches per minute at present, till any deviation/alternation is not done in the machine. The appellant is also directed under Rule 6 of Pan Masala Packing Machines (Capacity Determination and Collection of Duty) Rules, 2015, to inform at least 3 days in advance to the Divisional Deputy Commissioner of Central Excise or Assistant Commissioner of Central Excise, as the case may be, as and when any alteration in machines regarding maximum speed at which machines can be operated is to be carried out by the appellant. Appeal allowed - decided in favor of appellant.

Summary

Issues:
Determining duty payment based on machine speed for Pan Masala and Zarda Scented Tobacco packaging.

Analysis:
The appellant, engaged in Pan Masala and Zarda Tobacco manufacturing, paid duty based on machine speed as per the amendment rules. The dispute arose when the department determined the maximum speed of the machines differently than what was declared by the appellant. The appellant argued that the machines could operate at speeds beyond the determined limit. The Chartered Engineer's certificate suggested that the machines could be set to run at higher speeds through logical programming. However, the Engineer did not ascertain the capacity of the Servo Motors in the machines. The department contended that the speed could be increased by the manufacturer, but no verification was done. The Tribunal noted the Engineer's opinion but emphasized the lack of positive evidence supporting the claim that the machines could run beyond the determined speed.

In a similar case, the Tribunal referenced previous judgments where authorities directed manufacturers to inform them in advance of any alterations to machine speeds. Considering the facts and lack of contrary evidence, the Tribunal modified the adjudication order. The maximum speed of the machine was set at 696.5 pouches per minute until any changes were made. The appellant was directed to inform the authorities in advance of any alterations to the machine speed. The decision was based on the principle of relying on factual evidence and ensuring compliance with the rules.

Therefore, the appeal was disposed of with the modified adjudication order, emphasizing the importance of factual verification and adherence to regulatory requirements to determine duty payment accurately based on machine speeds for Pan Masala and Zarda Scented Tobacco packaging.