Tribunal overturns duty assessment, upholds calculation method. Appellant wins appeal with single-track machine ruling.

The Tribunal set aside the duty assessment based on actual production and upheld the duty calculation method using deemed production capacity as per Circular No.980/4/2014-CX. The Tribunal ruled in favor of the appellant, considering the packing machine as a single-track machine, in line with the precedent set by the Allahabad High Court. The appellant's appeals were allowed, and the impugned orders were overturned, granting consequential relief.

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Issues Involved:
1. Basis for Excise Duty Calculation
2. Deemed Production vs. Actual Production
3. Classification of Packing Machines

Summary:

1. Basis for Excise Duty Calculation:
The appellant, engaged in the manufacture of Chewing Tobacco, was assessed for excise duty based on the capacity of production under Section 3A of the Central Excise Act, 1944, as per Notification No.10/2010-CE(NT) dated 27.02.2010, and not on actual production. The duty was determined by multiplying the number of operating packing machines with the rate of duty per machine per month.

2. Deemed Production vs. Actual Production:
The appellant filed declarations regarding the number of packing machines and their operational speed, which were verified and approved by the jurisdictional officer. Despite discharging the duty liability based on these declarations, the department issued Show Cause Notices (SCNs) alleging that the appellant manufactured and cleared goods in excess of the deemed production capacity. The SCNs proposed duty demands based on actual production, which was higher than the deemed capacity. However, the CBEC Circular No.980/4/2014-CX dated 24.01.2014 clarified that duty should be based on deemed production with respect to the number of packing machines, not actual production.

3. Classification of Packing Machines:
The adjudicating authority argued that each track or line on a packing machine should be considered as an individual machine for duty purposes. The Tribunal examined this issue in the case of Dharampal Satyapal Ltd. v. CCE, Noida, and concluded that a duplex machine, which produces two pouches at a time, should be considered a single-track machine. This decision was upheld by the Hon'ble Allahabad High Court. Consequently, the Tribunal held that the appellant's machine should be treated as a single-track line machine, and no additional duty was payable.

Conclusion:
The Tribunal found no merit in the impugned orders and set them aside, allowing the appeals with consequential relief. The operative part of the order was pronounced in open Court.

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