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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 ..... 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. It is observed 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 'single track' machines. However, the Deputy Commissioner, Guwahati has not accepted their running declaration for the month of January 2011, based on the investigation initiated by the department in their Noida Unit. The Pakona make PK-91 packing machines installed at Guwahati Unit are identical to the Pakona make PK-90 packing machines installed at their Noida unit, which is evident from the Technical Literature as well as the report of IIT, Delhi - the department cannot raise any demand for the past period without challenging those orders. In January 2011, when they filed the Form-1 for fixing the Annaual Capacity of production ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... t 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 declaration of Annual capacity of production, in terms of Rule 6(6) of CTPM Rules, 2010, declaring the two FFS packing machines as 'single track machines', as declared and approved for the earlier period. However, the Deputy Commissioner of Central Excise, Guwahati passed order dated 05.01.2011, declaring the two packing machines as 'Double Track Machines' and determined the Annual Capacity and duty payable thereon accordingly. Aggrieved against the said order, the Appellant preferred appeal before Commissioner (Appeals), who vide his Or ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 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 department in CBIC Circular 1063/2/2018-Cx Dated 16.2.2018. Accordingly, they contended that the impugned order confirming the demand based on the order passed in respect of their Noida Unit, is liable to be set aside. (vi) The entire issue raised by the department is based on two sets of reports. One issued by Two senior professors of IIT Delhi in 2010 and again in 2012, which describes the machines as Single-track duplex machines, which is referred by CESTAT while deciding the Noida matter. Second report was issued by an Assistant Profe ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 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 stations. Vertical and bottom seals of pouch are made at two stations simultaneously (Fig.5). Two pouches further get separated from the web with the help of two cutters. With the help of two grippers the two pouches are then transferred to the rotary indexing work part flow mechanism for further operations. Following operations are carried out at each indexing step at two work stations synchronously. (a) Loading of pouches to the rotary indexing work flow mechanism with two grippers (b) Opening of mouth of the pouc ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 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 (Department of Revenue) vide Notification No. 30/2008-Central Excise (N.T) dated 1st July, 2008 and No. 11/2010-Central Excise (N.T.) dated 27th February, 2010 respectively and we find that these Rules Notifications do not establish a method to define the tracks or lines in Form, Fill and Seal (FFS) Packing Machines. 1.2 We had earlier carried out extensive survey of technical materials on various automatic FFS Packing Machines. Prof. Sanjeev Sanghi also visite ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... fied 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 can be classified as single or multi station form, fill and seal machine. Productively of FFS machines can be increased in the proportion of number of work stations used for an assembly or filling operation. 4.4 Dr. Kore in his report has described construction and operation of various work handing mechanism (such as in line segmented in line or rotary or hybrid ) that are used in automated assembly systems. 4.5 Number of tr ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... t 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 layout. [Refer page-25] It has been further stated that in this type of a layout, the processing and assembly processes are placed along the line of flow of the product. The product in reference to FFS Packing machine is the pouch and line would mean the path along which various processes such as forming, filling and sealing are carried out. This concept is further detailed as a transfer line .[R ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... (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 Manufacturing' of Mr. Groover where Feed track has been defined as a channel meant for transfer of material (to be packed) from hopper to the location where process of filling is carried out. Multiple feed tracks are typically used where more than one material are required to be filled in the same pouch. In this case, there would be no increase in the productivity of the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 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 conducted by the department in their Noida unit in 2011, by treating the said PK- 91, GMP Model Pakona Make machines as Double Track packing machines' . They stated that the said issue has attained finality as per the order of the Hon'ble High Court of Allahabad, which stands accepted by the department, in view of CBIC Circular 1063/2/2018-Cx Dated 16.2.2018 . We f ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 10333440 22963200 6. From Rs. 4.01 to Rs. 5.00 6314880 10333440 22963200 7. From Rs. 4.01 to Rs. 5.00 6314880 10333440 22963200 8. Above Rs. 6.00 6177600 10108800 22464000 For the purposes of this rule, if there are multiple track or multiple line packing 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 pack ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... basis of the actual production by a unit. 12. In the light of the specific finding given by the Tribunal, being the last fact finding authority, to the effect that the machine purchased by the assessee is a single track machine, the duty payable by the assessee on the basis of a single track machine, should have been levied. The Commissioner fell in error in treating the said machine as a two track machine. The order of the Commissioner was rightly set aside by the Tribunal. 13. In our view, no substantial question of law arises for consideration. 14. The appeals fail and are 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. Sinc ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... is own order, thereby violated Section 35 of the Central Excise Act, 1944. 15. We observe that the department has not adduced any explanations for the above said violations, in their grounds of appeal. We observe that the Commissioner (Appeals) has given a categorical finding that the Lower Authority has not followed the principles of natural justice before modifying the earlier orders, which were appealable orders. We agree with the view of the Commissioner (Appeals) that the department cannot modify the earlier orders without issuing Notice to the Appellant. As no appeal has been filed against the 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 de ..... X X X X Extracts X X X X X X X X Extracts X X X X
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