F. No. 81/03/2016-CX.3

Government of India

Ministry of Finance

Department of Revenue

Central Board of Excise and Customs

New Delhi, dated the 5^th Oct., 2016

To

Members/ Representatives of the Trade,

Principal Chief/ Chief Commissioner of Central Excise (All),

Principal Chief/ Chief Commissioner of Central Excise and Service Tax (All) and Director General (DGCEI).

Sub: Guidelines for determination of maximum packing speed of FFS pouch packing machine-reg.

Madam/ Sir,

Kind attention is invited to Pan Masala Packing Machine (Capacity Determination and Collection of Duty) Rules, 2008 and Chewing Tobacco and Unmanufactured Tobacco Packing Machine (Capacity Determination and Collection of Duty) Rules, 2010. The said rules were amended in the budget 2015-16 and the maximum packing speed at which a packing machine can be operated for packing of notified goods of various retail sale prices was made a factor relevant for determining deemed production.

2.  Representations have been received from the members of the Trade regarding lack of guidelines to verify the maximum speed of packing machines leading to disputes and litigation.

3.  In this regard, a draft circular proposed to be issued is enclosed. It is requested that the feedback on the draft circular may be provided by Officers of the Department and Members of the Trade by 20.10.2016 on the following email id: [email protected].

Yours faithfully,

(ROHAN)

Under Secretary (CX.3)

Encl.: Draft Circular.

Draft Circular No. / /2016-CX

F. No. 81/03/2016-CX.3

Government of India

Ministry of Finance

Department of Revenue

Central Board of Excise and Customs

New Delhi, dated the 2016

To

The Principal Chief Commissioners/ Chief Commissioners/Principal Commissioners of Central Excise (All)

The Principal Chief Commissioners/ Chief Commissioners/ Principal Commissioners of Central Excise & Service Tax (All)

Webmaster

Sub: Guidelines for determination of maximum packing speed of pouch packing machine-reg.

Madam/ Sir,

Kind attention is invited to Pan Masala Packing Machine (Capacity Determination and Collection of Duty) Rules, 2008 and Chewing Tobacco and Unmanufactured Tobacco Packing Machine (Capacity Determination and Collection of Duty) Rules, 2010 (herein after referred to as 'the Rules'). The said rules were amended in the budget 2015-16 and the maximum packing speed at which a packing machine can be operated for packing of notified goods of various retail sale prices was made a factor relevant for determining deemed production. Rule 6(2) of the said Rules provide for determination of the maximum packing speed, by the Assistant/ Deputy Commissioner of Central Excise, at which each of the packing machines available in a factory can be operated for packing of notified goods of various retail sale prices.

2.  Representations have been received from the members of the Trade regarding lack of guidelines to verify the maximum speed of packing machines leading to disputes and litigation.

3.  The issue has been examined. A study was conducted by DGCEI in collaboration with IIT, Delhi to examine the methodology for determination of maximum packing speed. The study has established that through the use of automation software consisting of PLC (Programme Logic Controller) and Human Machine Interface, the speed of the Rotary Servo Motors installed in the said machines could be synchronised which in turn would control and determine the maximum speed of the pouch making machines. Through the study, it has been concluded that theoretical maximum speed of the pouch packing machine can be determined based on the principle of kinematics, after taking an efficiency factor of 80%. The efficiency factor takes into consideration various other limiting factors, such as, various design parameters of the mechanical and electrical parts, the product to be manufactured, the volume/ size of the pouches and the type of packaging materials used etc.

4. Formula for determination of Maximum Packing Speed

4.1 Based on the above study, the following formula shall be applied by the field officers to derive the maximum speed of the pouch packing machine:

Maximum Packing Speed= RPM of the rotary motor X No. of funnels X 0.80 /Overall Gear Box Ratio

4.2    The parameters mentioned in the above formula are explained below as:

a)  RPM of the rotary motor: It is the maximum rotation per minute of the servometer which drives the rotary packing machine. The value of this RPM is mentioned on the specifications plate on the servometer. This speed can also be measured by Tachometer.

b)  Number of Funnels: It is the number of conical inlets on the rotating plate where pan masala falls from the hopper and then it is filled in the pouches and packed. The number of funnels can be counted manually.

c)  Overall Gear Ratio: It is the ratio of maximum rotation per minute of the servometer (rated RPM) to the rotation per minute of the disc containing funnels. The RPMs can be measured by Tachometer and can be divided to obtain overall gear box ratio.

5.      Procedure for determination of Maximum Packing Speed

5.1 Existing Manufacturers

i. For existing manufacturers, who are already registered under Central Excise and carrying manufacturing activity, the manufacturer may exercise the option of getting the maximum packing speed verified in terms of the above formula. In such cases, the manufacturer shall file a fresh declaration under rule 6(6) of the Rules. The maximum packing speed, in such cases, shall be re-determined by the manufacturer in terms of above prescribed formula indicating clearly the parameters in the following format,

ii.      It may be noted that the above formula shall apply only to rotary type pouch packing machines. The parameters mentioned in the above formula shall be determined, in the presence of jurisdictional Range Superintendent, by a Govt. approved Chartered Engineer. Once the maximum packing speed has been determined, the manufacturer shall file the declaration including details of maximum packing speed duly certified by the said Chartered Engineer before the DC/ AC concerned.

iii.     For other categories of packing machines, the above formula shall not apply. The maximum packing speed in such cases shall be determined, in the presence of jurisdictional Range Superintendent, by the Govt. approved Chartered Engineer. The maximum packing speed shall be based on the findings of the Chartered Engineer duly certified by him.

5.2 New Manufacturers

In case of new manufacturers, the declaration shall be filed by the manufacturer in terms of Rule 6(1) of the Rules. The maximum packing speed shall be determined by the manufacturer as per procedure prescribed in para 5.1 above. The manufacturer shall file the declaration, including details of maximum packing speed, before the jurisdictional DC/ AC.

5.3 Order of DC/ AC

On receipt of the declaration containing details of maximum packing speed, determined as per procedure at para 5.1 or 5.2, as applicable, the DC/ AC concerned shall approve the declaration and pass necessary orders, after making such inquiry and verification as may be necessary, including re-determination of maximum packing speed, for reasons to be recorded in writing, in accordance with the provisions of the Rule 6(2) of the Rules. It may also be noted that the jurisdictional Commissioner may at his discretion order re-determination of maximum packing speed in certain cases, if deemed necessary, to either plug evasion of duty or bring certainty to the quantification of duty. The procedure for re-determination of maximum packing speed shall remain the same as prescribed at para 5.1 and 5.2 above.

5.4 Action in specific intelligence cases

In cases where the jurisdictional Central Excise officer receives specific intelligence regarding tampering of any of the parameters mentioned in the above formula or otherwise, the Central Excise officer concerned shall, with the prior written approval of Additional/ Joint Commissioner concerned in the file, conduct necessary verification at the manufacturer's premises as per the procedure prescribed above. Under no circumstances, the premises of the manufacturer shall be visited by Range/ Preventive Superintendent or Inspector for verification of the speed of the machine(s) without prior approval of the Additional/ Joint Commissioner.

6.      Sealing/ De-sealing of Machines

6.1 Attention is invited to Rule 10 of the Pan Masala Packing Machine (Capacity Determination and Collection of Duty) Rules, 2008 and Chewing Tobacco and Unmanufactured Tobacco Packing Machine (Capacity Determination and Collection of Duty) Rules, 2010, regarding procedure for availing abatement of duty in case of non-production of notified goods. On receipt of request for sealing of packing machines from the manufacturer, the jurisdictional DC/ AC of Central Excise shall direct the Range Superintendent concerned to get the machines sealed under his physical supervision immediately and in no case later than 3 days of receipt of such a request. In case of any delay in sealing the machine beyond the prescribed period, the DC/ AC concerned shall immediately bring it to the notice of the Additional/ Joint Commissioner concerned, who on receipt of such information would take necessary steps to ensure that such delays do not happen.

6.2 When the manufacturer intends to restart production, a request shall be made to the jurisdictional DC/ AC of Central Excise for opening of seals on the packing machine. The procedure described in the preceding para shall also be strictly followed for opening of seals under the physical supervision of the Range Superintendent.

7. Difficulty faced, if any, in implementing the circular should be brought to the notice of the Board. Hindi version will follow.

(ROHAN)

Under Secretary to the Govt. of India