Compounded levy duty must follow actual machine use, not unproved assumptions contrary to accepted monthly declarations.

Under the compounded levy scheme for cold rolling machines, duty liability had to be based on the machines actually operated during the relevant months, not on the total machines found in the factory. The declarations filed for the preceding months consistently stated that only two machines were employed, and the record contained no inspection report or other evidence rebutting those declarations. In the absence of proof that additional machines were operated, a demand calculated on four or six machines was unsustainable. The appellate demand was set aside and the original order dropping the demand was restored with consequential relief.

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Issues: Whether, under the compounded levy scheme for cold rolling machines, duty could be demanded on the basis of the total number of machines found in the factory or only on the number of machines declared as operated during the relevant months.

Analysis: The scheme required monthly declarations and payment of duty according to the machines employed for production. The record did not show that the appellant had operated more than two machines during the disputed period. The declarations filed at the end of each preceding month consistently stated that only two machines were being employed. No inspection report or other evidence established any violation of those declarations. In the absence of evidence rebutting the declarations, the demand based on six or four machines was treated as unsustainable.

Conclusion: The demand could not be sustained on the basis of the higher number of machines, and the duty liability had to be confined to the two machines declared by the appellant.

Final Conclusion: The appeal succeeded, the appellate demand was set aside, and the original order dropping the demand was restored with consequential relief.

Ratio Decidendi: Under a compounded levy scheme, duty liability must be supported by evidence that the assessee actually operated the additional machines for the relevant period, and a demand cannot rest on mere assumptions contrary to unchallenged declarations.

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