Sealed packing machines not counted as operating machines for monthly duty when kept non-operative under official supervision.

Monthly duty under the Pan Masala Packing Machines (Capacity Determination and Collection of Duty) Rules, 2008 is determined by the number of operating packing machines in the factory. Machines that were duly sealed, kept under physical supervision, and rendered non-operative were not required to be counted as operating machines merely because they remained within the factory premises. In the absence of any allegation of reinstallation, operation, or tampering, the proper officer's duty determination based on the machines actually operated during the month was upheld in favour of the assessee.

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Issues: Whether packing machines sealed and kept in a separate room, but not physically removed from the factory, were liable to be counted as operating machines for determining monthly duty under the Pan Masala Packing Machines (Capacity Determination and Collection of Duty) Rules, 2008.

Analysis: The duty under the scheme is linked to the number of operating packing machines in the factory for the relevant month. The record showed that the sealed machines were placed under physical supervision, rendered non-operative, and were not found to have been reinstalled, run, or tampered with. The proper officer accepted the declaration and determined the duty on the basis of the machines actually operated during the month. The objection that the machines were not physically removed from the premises did not by itself justify including them in the taxable machine count, particularly when there was no allegation of foul play and the authorities had acted on the facts found at the site.

Conclusion: The sealed machines were not required to be included in the count of operating machines, and the duty determination made on the basis of the machines actually operated was upheld in favour of the assessee.

Ratio Decidendi: Under the Pan Masala Packing Machines (Capacity Determination and Collection of Duty) Rules, 2008, monthly duty is to be determined on the basis of operating packing machines, and machines that are duly sealed and rendered non-operative under official supervision are not to be treated as operating machines merely because they remain within the factory .

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