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TMI Blog2023 (9) TMI 181X X X X Extracts X X X X X X X X Extracts X X X X ..... achines. Department initiated investigation to find out whether the packing machines used by the Units 1 and 2 were 'double track machines' mis-declared as 'single track machines'. After investigation, a Show Cause Notice dated 30.05.2011 was issued proposing to declare the two FFS Machines (PK-91 GMP Model), as 'double tracking machines' and demanded duty of Rs.5,71,75,000/- for the months of May 2010 and November 2010 and Rs. 7,10,53,226/- for the months June 2010 to October 2010, along with interest and penalty.(This amount includes Rs.2,02,10,484/- demanded as duty short paid for the month of May 2010, by denying the abatement , vide SCN dated 24.05.2011). The said Notices were adjudicated by The Commissioner vide Order-in-Original dated 26.02.2014, confirming the duty demanded in the Notices along with interest. Penalty equivalent to the duty confirmed was also imposed under Rule 18 of the CTPM Rules, 2010 read with Section 11AC of the Central Excise Act, 1944. Aggrieved against the impugned order, the Appellant filed Excise Appeal Nos.75863 and 75864 of 2014. 2. In the month of January 2011, the Appellant submitted an Application in Form-1, for declar ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... pect to their Noida Unit by treating the said PK-91, GMP Model Pakona Make machines as "Double Track packing Machines'. The said issue has attained finality vide order of Allahabad High Court, which stands accepted, in view of CBIC Circular 1063/2/2018-Cx Dated 16.2.2018 . (iv) Based on Noida investigation, the Deputy Commissioner Guwahati has not accepted their running declaration for the month of January 2011, as 'single track' machine and issued order dated 05.01.2011, declaring the same as 'double track' machine. This order was challenged before Commissioner (A), who allowed the appeal and is now subject matter of departmental appeal E/830/2011. Similarly for earlier periods SCN was issued and demand was confirmed with respect to unit -1 & 2 at Guwahati by treating the machines as 'double track', which is subject matter of their appeal. (v) The department has departed from the stand taken earlier for several months, only on the basis of the investigation conducted at their Noida Unit. The said issue has attained finality in respect of their Noida Unit, as per the order passed by the Hon'ble Allahabad High Court, which has been accepted by the dep ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... n the basis of the Report received from Dr. Kore, of IIT, Guwahati. For the sake of ready reference, the relevant portion of the Report is reproduces below: " 3. Classification of PAKONA form fill and Seal Machines installed at Dharampal Satyapal Ltd., Guwahati: A study of determination of number of tracks or lines has been carried out at the Dharampal Satyapal Ltd., Bamunimaidan Industrial Estate, Guwahati, 781021, Assam on February 10, 2011. Observations are made for determining the number of hoppers, feed tracks work stations, inline work flow and rotary work flow mechanisms which are present on the two PAKONA make FFS machines used at Dharampal Satyapal Ltd., (DSL) Guwahati. It is observed that the two PAKONA make FFS packing machines operating at DSI, has intermittent operations. It draws the packaging material horizontally off a supply reel by two rollers. It then passes through piercing device with a die and punch where two equidistance holes are made to form a stand up pouch. A folded W is then formed by converting the web with the help of folding plough and a gusset former. A formed pouch is transferred in vertical position in line to the sealing and zip fitting stat ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ary work flow system. 7. We observe that IIT Delhi professors Dr. Sanjeev Sanghi and Dr. Sudipto Mukherjee has examined the PK-90 packing machines of Pakona make and gave their report in respect of the Noida Unit in October 2010, wherein they have concluded that PK-90 packing machine as 'single track machine'. The Report of Dr. Kore was shown to the Professors of IIT, Delhi for analysis and after studying the Report of Dr. Kore, IIT Delhi professors have given their Report in November 2012, wherein they have declared the Pakona PK-91 model packing machines as 'Single-Track machines'. For ready reference, the relevant part of the Report is reproduced below : Introduction: The scope of this work is to determine 'number of tracks that are available in a Form Fill and Seal (FFS) Packing Machine PK-91 GMP model manufactured by M/s Pakona Engineers (I) Pvt. Ltd., Background 1.1 We have gone through Pan Masala Packing Machines (Capacity Determination and Collection of Duty) Rules, 2008 and Chewing Tobacco and Unmanufactured tobacco Packing Machines (Capacity Determination of Collection of Duty) Rules, 2010 notified by Government of India. Ministry of Finance (Depa ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... rature on automated production systems (Machines) that are used in various automated plants (such as automobile assembly, battery cell assembly and bottle filling) including automated form fill and seal machines. 4.2 A typical automatic FFS Packing Machine may consist of several sub-systems of work stations where the pouches are formed, material (to be packed) is fed in to the formed pouches and filled pouches are sealed as has been identified by Dr. Kore in his report. In technical literature each such process is called a unit operation. It has been stated that Automatic FFS machine can be classified based on these subsystems. Dr. Kore has defined feed tracks' and work station on FFS Packing Machine as under:- 'Feed track' is a device which transfers the maerials (to be packed) from 'Hopper' to the location of work station of the FFS machine where the material (to be packed) is tilled in the empty pouches. "work station' is a location in assembly system at which various processing and assembly operations are carried out. 4.3. Dr. Kore in his report states that 'depending upon number of synchronous forming, filling and sealing stations used in any form fill and seal machine it ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... me line or track) that consumer disproportionate processing time. Use of additional work station does not inevitably lead to corresponding increase in productivity, thus the observations of Dr. Kore in Para 2.1.3 of his Report "Productivity of FFS machines can be increased in the proportion of number of work stations used for an assembly or filling operation" is not correct. 5.6. Dr. Kore in his report has failed to relate various work handing mechanism viz a viz machine productivity. Configuration of various types of work handling mechanisms may not be relevant to subject matter unless use of any specified system results in improved productivity. It may be useful for selection of mechanism for the purpose of machine design viz a viz processing time and cost etc. 5.7 For definition of 'line' in reference to FFS Packing machine, we wish to refer to celebrated book by Mikel P. Groover on Automation, Production Systems, and Computer-Integrated Manufacturing. The same reference has also been cited extensively by Dr. Kore. Production units and plants specialized in production of one class of products in large volumes such as FFS Packing machines have been classified as product-flow l ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... flow along 'line' A feed track' mentioned in the report by Dr. Kore is a subsystem level classification, and different from 'track' referred to in No. 11/2010 Central Excise (N.T.) dated 27th February, 2010. In view of above discussions and on the basis of study conducted by in past, we reconfirm that FFS Packing Machines PK-90/PK-91 GMP model manufactured by Pakona Engineers (I) Pvt. Ltd. are Horizontal, Single Line, Single Track, duplex machines for forming filling and sealing of pouches. 9. From the Two reports, we observe that Dr. Kore's Report was based on his survey of PK-91 model machine alone and he has not surveyed the operation and features of other FFS Packing Machines that are available in the market. The Report of IIT, Delhi has analyzed the Report of Dr. Kore and categorically states that in the Pakona Machine in question, the laminate and ALL the pouches flow horizontally along a single line in space at various stages (forming-filling-sealing). There cannot be two opinions that the Pakona make FFS packing Machine is a Horizontal and single line machine. The Report of IIT, Delhi has referred the book 'Automation, Production Systems, and Computer-Integrated M ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... is folded and sealed from three sides and the sip is embedded in between, by the machine. Then, two cutting knives cut two pouches at the same time. Just because two pouches are cut at the same time, it cannot be called a double track machine. Since a single laminate roll is fed into the machine, it is only a single track machine. 10. Thus, we agree with the findings of the IIT, Delhi Report and hold that the PK-91 GMP Model Packing machine is a 'single track' machine. As per 'Explanation' to Rule 5 of the CTPM Rules, 2010, if there are multiple track or multiple line packing machines, then each one of such track or line shall be deemed to be one individual packing machine for the purposes of calculation of the number of pouches per operating packing machine per month. Since, it has been concluded that PK-91 GMP Model packing machine is a 'single track' machine, we hold that duty has to be calculated by treating it as single track packing machine. 11. In their submissions, the Appellant raised various grounds based on which the impugned order is not sustainable. The Appellant stated that the Notice in this case was issued based on an investigation conduct ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... cking machine which besides packing the notified goods in pouches, perform additional processes involving moulding and giving a definite shape to such pouches with a view to distinguish the brand or to prevent the counterfeiting of the goods, etc. Two such tracks or lines shall be deemed to be one individual packing machine for the purposes of calculation of the number of pouches per operating packing machine per month : Provided that in case of multiple track or multiple line packing machine which are incapable of performing such additional processes, one such track or line shall be deemed to be one individual packing machine for the purposes of calculation of the number of pouches per operating packing machine per month.]" 8. The proviso to the Explanation to Rule 5 provides that in case of multiple track or multiple line packing machine, which are incapable of performing such additional processes, one such track or line shall be deemed to be one individual packing machine for the purposes of calculation of the number of pouches per operating packing machine per month. It means that if a machine has two tracks or more multiple lines, the said track or lines would be treated a ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e dismissed. 12. We observe that the Pakona made FFS machines available at the Guwahati factory of the Appellant are PK-91 GMP model and that this model is a variant of PK-90 model, modified for the purpose of production of pouches of different sizes, otherwise the functions and features of both the models are identical. Hence, we observe that the decision of the Hon'ble High Court of Allahabad is squarely applicable in this case. Accordingly, we hold that the demand confirmed in this order by treating the two FFS packing machines as 'Double Track Machines' is not sustainable. Since the demand itself is not sustainable, the question of imposing penalty does not arise. 13. Regarding the Appeal filed by the department, we observe that the appeal was against the Order-in-Appeal dated 27.06.2011, wherein the order dated 05.01.2011 passed by the Deputy Commissioner was set aside by the Commissioner (Appeals). We observe that the Appellant has been filing declarations as per Rule 6 of the CTPM Rules in 2010 and the Deputy Commissioner has passed orders fixing their Annual Capacity of production and the duty payable thereon, by treating the PK-91 packing machines as 'sin ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e earlier orders, fixing the Annual Capacity of production by treating the machines as 'single track' machines, we hold that the demand for the past period from May 2010 to November 2010 confirmed in the impugned order is not sustainable. Thus, we hold that the order dated 05.01.2011 passed by the Deputy Commissioner, modifying the Annual Capacity of production by treating the 'single track' machines as 'double track' machines, is not sustainable. Accordingly, we uphold the impugned order passed by the Commissioner (Appeals) and reject the appeal filed by the department. 15. In view of the above discussion, we hold that the two PK-91 GMP Model packing machines are 'single track' machines. The demand of duty confirmed in the impugned order by treating the machines as 'Double Track' machines is not sustainable. Accordingly, the impugned order confirming the demand of duty along with interest and imposing penalty equivalent to the duty, is set aside, and the Appeal filed by the appellant is allowed. The Order-in-Appeal passed by the Commissioner (Appeals) is upheld and the department appeal is rejected. ( Pronounced in the open court on 04. 09 ..... X X X X Extracts X X X X X X X X Extracts X X X X
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