CESTAT allows appeal on duty compounding for unsealing pouch packing machine used for sweet supari not Gutkha

CESTAT Allahabad allowed the appeal regarding compounding of duty on unsealing of a pouch packing machine. The revenue failed to establish that the machine was used for packing Gutkha. Evidence including declarations, ground plans, and correspondence demonstrated the machine was installed in a separate room exclusively for packing sweet supari. The duty demand contradicted the filed declaration and ground plan required under Pan Masala Packing Machines (Determination of Capacity and Collection of Duty) Rules, 2008. The impugned order lacked merit.

---

---

Issues involved: Determination of duty liability u/s 11A of the Central Excise Act, 1944 based on the number of operational packing machines for Pan Masala production.

Summary:
The appeal was against an Order-in-Original passed by the Commissioner confirming a demand of Rs.12,50,000 under Section 11A(2) of the Central Excise Act, 1944, upon a manufacturer of Pan Masala. The appellant had been discharging duty on a compounding basis as per the provisions of the Pan Masala Packing Machines Rules, 2008. The dispute arose regarding the actual number of operational machines during a specific period.

The Commissioner held that only the operative packing machines engaged in the manufacturing process were relevant for duty computation. It was found that during the relevant period, a maximum of five Gutkha machines was operational in the factory. The appellant's contention about a separate machine for Sweet Supari was not accepted as no evidence was produced to show its segregation from Gutkha production. The Commissioner concluded that duty was short paid and liable for recovery under Section 11A(1) of the Act along with interest.

The appellant argued that one machine for sweet supari was installed in a separate room, as per the ground plan and declaration filed, and was not used for Gutkha production. The impugned order did not consider this evidence, leading to a discrepancy in the duty demand. The Tribunal found merit in the appellant's argument and allowed the appeal, emphasizing the importance of adhering to the rules for determining duty liability accurately.

In conclusion, the Tribunal set aside the Commissioner's order and ruled in favor of the appellant, highlighting the necessity of following the prescribed guidelines for duty calculation in Pan Masala production.

Separate Judgement: None.

---