Packing machine capacity rules did not permit treating one machine as two merely because a new retail sale price was introduced.

Use of the same packing machine for pouches bearing a different retail sale price during a month did not justify treating the machine as two packing machines under the first proviso to Rule 8 of the Pan Masala Packing Machine (Capacity Determination and Collection of Duty) Rules, 2008. The Tribunal followed its earlier decision on the same point and noted that both sides accepted the controversy had already been decided in favour of the assessee. The demand had proceeded on the footing that commencement of manufacture of a new retail sale price on an existing machine increased the number of operating packing machines for that month. The demand, interest and penalty were therefore not sustainable.

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Issues: Whether, for the months in which the assessee used the same packing machine for pouches bearing a different retail sale price, the first proviso to Rule 8 of the Pan Masala Packing Machine (Capacity Determination and Collection of Duty) Rules, 2008 warranted treating each machine as two packing machines and confirming the consequential demand, interest and penalty.

Analysis: The issue was covered by the Tribunal's earlier decision on the same point, and both sides accepted that the controversy stood decided in the assessee's favour. The impugned demand proceeded on the basis that commencement of manufacture of a new retail sale price on an existing machine during the month amounted to an addition in the number of operating packing machines for that month.

Conclusion: The demand, interest and penalty could not be sustained on the facts of the case, and the assessee succeeded on the issue.

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