2017 (8) TMI 1103 - AT - Central Excise

Tribunal allows assessee's appeal, dismisses revenue's claim

The Tribunal allowed the appeal by the assessee-appellant, setting aside the impugned order. The revenue's appeal was dismissed as it lacked merit, with ... Valuation - Compounded Levy Scheme - manufacture of pan masala - number of packing machines installed and their speed - Held that: - the only thing revenue found on the date of inspection was that the appellant was having packing material lying in the storeroom having MRP of ₹ 1.50. Accordingly, we find that the revenue have not found anything in contrast to the declaration filed by the appellant on 10th July, 2008 in form-1, as required under the notification for compounded levy - the SCN is wholly illusory and not based on the facts on record. It is neither case of the revenue that they have found more packing machines on the manufacturing floor than the number of packing machines declared nor found more number of packing machines engaged in the manufacture of Pan Masala, Gutkha, nor there is any finding of appellant engaged in manufacture of Pan Masala & Gutkha having MRP of ₹ 1.50 or any other MRP other than the declared MRP of ₹ 1.00 per pouch. In this view of the matter, the SCN is misconceived and not sustainable. Appeal allowed - decided in favor of appellant. Issues:Appeal arising from Order-in-Original regarding compounded levy scheme for Pan Masala, Gutkha, and Sweet Supari manufacturing.Detailed Analysis:Issue 1: Declaration and InspectionThe appellant declared intention to suspend production and later resume with specific machines for different products. The Deputy Commissioner inspected and found discrepancies in the declared and actual production setup, leading to a demand for differential duty. The appellant contested the modification, highlighting the removal of machines and the segregation of production lines.Issue 2: Duty Determination and RepresentationThe Deputy Commissioner determined duty based on the machines' capacity and production speed, leading to a demand for additional duty. The appellant represented the discrepancies in the determination, citing the removal of machines and the absence of contrary evidence to their declaration.Issue 3: Adjudication and PenaltyThe show cause notice was adjudicated, confirming a portion of the demand for differential duty and imposing a penalty. The appellant challenged the demand, arguing that no findings contradicted their declaration. The revenue appealed against the dropped demand for Sada Pan Masala and the penalty amount.Judgment:The Tribunal found that the revenue's inspection did not reveal any discrepancies from the appellant's declaration. As no evidence supported the demand for additional duty, the show cause notice was deemed illusory. Consequently, the impugned order was set aside, and the appeal by the assessee-appellant was allowed, while the revenue's appeal was dismissed for lacking merit.