2018 (3) TMI 913 - AT - Central Excise

Operation of machinery - manufacture of Pan Masala and Gutkha - whether installation of machinery can be treated as that the machine is operational? - Held that - there are no reason 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 un-operative - appeal dismissed - decided against Revenue.

Summary

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

Analysis:
The appeal before the Appellate Tribunal CESTAT, Allahabad was directed against an Order-in-Appeal passed by the Commissioner (Appeals) regarding the determination of the annual production capacity of a company engaged in manufacturing Pan Masala and Gutkha. The Commissioner (Appeals) modified the order dated 17.07.2008, which determined the number of installed machines for duty calculation. The Commissioner observed that out of eight packing machines, only one was operational on the effective date of the rules, as the remaining seven were sealed and technically uninstalled. The Commissioner concluded that only five machines should be considered as installed for duty determination. The Revenue contended that once a machine is installed, it should be considered operational, regardless of being sealed. The Tribunal heard arguments from both parties and examined the records. The Tribunal rejected the Revenue's argument, stating that a sealed machine cannot be considered operational, even if installed. The Tribunal found no merit in the Revenue's grounds and dismissed the appeal, granting the respondent consequential relief as per law.

This judgment primarily revolves around the interpretation of whether a sealed machine can be considered operational for duty calculation purposes. The Tribunal upheld the Commissioner's decision that sealed machines should not be counted as operational, even if installed. The case highlights the importance of accurately determining the number of operational machines for duty calculation in manufacturing units. The Tribunal's ruling clarifies that mere installation does not equate to operational status if the machine is sealed and cannot be used practically. The judgment emphasizes the need for a practical approach in determining operational machinery for duty assessment in such cases.