2023 (9) TMI 1133 - AT - Central Excise

Refund claim - manufacture and clearance of goods in excess of the production capacity as determined by the Assistant/Deputy Commissioner of Central Excise in terms of Rule 5 of N/N. 16/2010-CE - CBEC Circular No.980/4/2014-CX dated 24.01.2014 - HELD THAT - The said Circular clearly clarifies that duty is to be paid by the assessee in terms of the Chewing Tobacco Unmanufactued Tobacco Packing Machines (Capacity Determination Collection of Duty) Rules, 2010, which has been determined by the adjudicating authority and on that basis the appellant has paid the duty, therefore, if during physical verification production is found more, no duty is payable by the appellant and the said issue also examined by this Tribunal in the case of KAIPAN PAN MASALA PVT. LTD. VERSUS C.C.E. S.T., BHOPAL 2016 (7) TMI 1104 - CESTAT NEW DELHI . As in the matters in hand, the appellants were paying duty in terms of Notification No.16/2010-CE(NT) dated 27.02.2010 read with Rule 10 of Chewing Tobacco Unmanufactued Tobacco Packing Machines (Capacity Determination Collection of Duty) Rules, 2010, therefore, the appellant paid correctly and no further duty is payable by the appellant on the basis of actual production, which was found higher than the deemed annual capacity of production. The said machine shall be considered as duplex single track line machine and no further duty is to be demanded from the appellant. There are no merits in the impugned orders and the same are set aside - appeal allowed.

Summary

Issues Involved:
1. Basis for Excise Duty Calculation
2. Deemed Production vs. Actual Production
3. Classification of Packing Machines

Summary:

1. Basis for Excise Duty Calculation:
The appellant, engaged in the manufacture of Chewing Tobacco, was assessed for excise duty based on the capacity of production under Section 3A of the Central Excise Act, 1944, as per Notification No.10/2010-CE(NT) dated 27.02.2010, and not on actual production. The duty was determined by multiplying the number of operating packing machines with the rate of duty per machine per month.

2. Deemed Production vs. Actual Production:
The appellant filed declarations regarding the number of packing machines and their operational speed, which were verified and approved by the jurisdictional officer. Despite discharging the duty liability based on these declarations, the department issued Show Cause Notices (SCNs) alleging that the appellant manufactured and cleared goods in excess of the deemed production capacity. The SCNs proposed duty demands based on actual production, which was higher than the deemed capacity. However, the CBEC Circular No.980/4/2014-CX dated 24.01.2014 clarified that duty should be based on deemed production with respect to the number of packing machines, not actual production.

3. Classification of Packing Machines:
The adjudicating authority argued that each track or line on a packing machine should be considered as an individual machine for duty purposes. The Tribunal examined this issue in the case of Dharampal Satyapal Ltd. v. CCE, Noida, and concluded that a duplex machine, which produces two pouches at a time, should be considered a single-track machine. This decision was upheld by the Hon'ble Allahabad High Court. Consequently, the Tribunal held that the appellant's machine should be treated as a single-track line machine, and no additional duty was payable.

Conclusion:
The Tribunal found no merit in the impugned orders and set them aside, allowing the appeals with consequential relief. The operative part of the order was pronounced in open Court.