2024 (2) TMI 814 - AT - Central Excise

Compounding of duty - unsealing of one pouch making machine or not - one pouch packing machine that was installed in separate room as per the ground plan and used for packing sweet supari - HELD THAT - No evidence has been produced by the revenue to establish that this machine was being used for packing Gutkha. All the evidences produced in form of declaration, ground plan and correspondences show that this machine was installed in the separate room and was used only for the purpose of packing sweet supari. Accordingly, there are no merits in the impugned order to that extent. It demands duty contrary to the declaration filed along with the ground plan, which is required in terms of Pan Masala Packing Machines (Determination of Capacity and Collection of Duty) Rules, 2008. Appeal allowed.

Summary

Issues involved: Determination of duty liability u/s 11A of the Central Excise Act, 1944 based on the number of operational packing machines for Pan Masala production.

Summary:
The appeal was against an Order-in-Original passed by the Commissioner confirming a demand of Rs.12,50,000 under Section 11A(2) of the Central Excise Act, 1944, upon a manufacturer of Pan Masala. The appellant had been discharging duty on a compounding basis as per the provisions of the Pan Masala Packing Machines Rules, 2008. The dispute arose regarding the actual number of operational machines during a specific period.

The Commissioner held that only the operative packing machines engaged in the manufacturing process were relevant for duty computation. It was found that during the relevant period, a maximum of five Gutkha machines was operational in the factory. The appellant's contention about a separate machine for Sweet Supari was not accepted as no evidence was produced to show its segregation from Gutkha production. The Commissioner concluded that duty was short paid and liable for recovery under Section 11A(1) of the Act along with interest.

The appellant argued that one machine for sweet supari was installed in a separate room, as per the ground plan and declaration filed, and was not used for Gutkha production. The impugned order did not consider this evidence, leading to a discrepancy in the duty demand. The Tribunal found merit in the appellant's argument and allowed the appeal, emphasizing the importance of adhering to the rules for determining duty liability accurately.

In conclusion, the Tribunal set aside the Commissioner's order and ruled in favor of the appellant, highlighting the necessity of following the prescribed guidelines for duty calculation in Pan Masala production.

Separate Judgement: None.