High Court directs re-determination of duty on 'Sada Pan Masala' based on correct production speed

The High Court set aside the Assistant Commissioner's duty determination on 'Sada Pan Masala', directing a re-determination based on the correct production speed of 700 pouches per minute instead of the initially declared 1000 pouches per minute. The Court emphasized the importance of accurately declaring the packing machine's operating speed for duty assessment under the Rules of 2008, ruling in favor of the petitioner's argument for duty assessment based on the actual machine capacity.

---

---

Issues:
Challenge to duty determination on 'Sada Pan Masala' by Assistant Commissioner, Central Excise Division, Jodhpur based on Rules of 2008.

Analysis:
The case involved a challenge to an order passed by the Assistant Commissioner, Central Excise Division, Jodhpur, determining a specific duty payable by the petitioner on 'Sada Pan Masala'. The Central Government had framed the "Pan Masala Packing Machines (Capacity Determination and Collection of Duty) Rules, 2008" applicable to Pan Masala and Gutkha. These rules specified the number of pouches produced by one operating packing machine per month based on retail sale price. The petitioner declared a packing machine's capacity to produce up to 1000 pouches per minute as per Rule 6 of the Rules of 2008.

Subsequently, amendments were made to the Rules in 2015, changing the duty criteria per packing machine per minute. The petitioner then communicated that their machines could operate at a maximum speed of 700 pouches per minute, necessitating a redetermination of production capacity. An inspection found the machine's speed to be 684 pouches per minute, leading to the duty determination of Rs. 231.47 Lacs per month by the Assistant Commissioner.

The petitioner argued that the duty should have been based on a production speed of less than 700 pouches per minute, as per their declaration and the inspection findings. On the other hand, the respondents contended that the duty was rightly determined based on the initial declaration of a production speed of up to 1000 pouches per minute, without room for alteration.

The Court noted that a manufacturer must declare the packing machine's operating speed for notified goods under the Rules of 2008. Despite the petitioner's initial declaration of a 1000 pouches per minute capacity, subsequent alterations limited the machine's speed to 700 pouches per minute. The Court found no justification for assessing duty based on a higher speed when the machine's actual capacity was limited to 700 pouches per minute. Therefore, the Court set aside the order and directed the re-determination of duty based on the correct production speed of 700 pouches per minute. The writ petition was allowed in favor of the petitioner.

---