TaxTMI 
TaxTMI 
2023 (9) TMI 181
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....es' and paid excise duty as applicable to single track machines. Department initiated investigation to find out whether the packing machines used by the Units 1 and 2 were 'double track machines' mis-declared as 'single track machines'. After investigation, a Show Cause Notice dated 30.05.2011 was issued proposing to declare the two FFS Machines (PK-91 GMP Model), as 'double tracking machines' and demanded duty of Rs.5,71,75,000/- for the months of May 2010 and November 2010 and Rs. 7,10,53,226/- for the months June 2010 to October 2010, along with interest and penalty.(This amount includes Rs.2,02,10,484/- demanded as duty short paid for the month of May 2010, by denying the abatement , vide SCN dated 24.05.2011). The said Notices were adjudicated by The Commissioner vide Order-in-Original dated 26.02.2014, confirming the duty demanded in the Notices along with interest. Penalty equivalent to the duty confirmed was also imposed under Rule 18 of the CTPM Rules, 2010 read with Section 11AC of the Central Excise Act, 1944. Aggrieved against the impugned order, the Appellant filed Excise Appeal Nos.75863 and 75864 of 2014. 2. In the month of January 2011....
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....was conducted by the department in their Noida unit in 2011 and SCN was issued with respect to their Noida Unit by treating the said PK-91, GMP Model Pakona Make machines as "Double Track packing Machines'. The said issue has attained finality vide order of Allahabad High Court, which stands accepted, in view of CBIC Circular 1063/2/2018-Cx Dated 16.2.2018 . (iv) Based on Noida investigation, the Deputy Commissioner Guwahati has not accepted their running declaration for the month of January 2011, as 'single track' machine and issued order dated 05.01.2011, declaring the same as 'double track' machine. This order was challenged before Commissioner (A), who allowed the appeal and is now subject matter of departmental appeal E/830/2011. Similarly for earlier periods SCN was issued and demand was confirmed with respect to unit -1 & 2 at Guwahati by treating the machines as 'double track', which is subject matter of their appeal. (v) The department has departed from the stand taken earlier for several months, only on the basis of the investigation conducted at their Noida Unit. The said issue has attained finality in respect of their Noida Unit....
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..... We observe that the department has categorized the PK-91 GMP Model machines as 'Double Track Machines' on the basis of the Report received from Dr. Kore, of IIT, Guwahati. For the sake of ready reference, the relevant portion of the Report is reproduces below: " 3. Classification of PAKONA form fill and Seal Machines installed at Dharampal Satyapal Ltd., Guwahati: A study of determination of number of tracks or lines has been carried out at the Dharampal Satyapal Ltd., Bamunimaidan Industrial Estate, Guwahati, 781021, Assam on February 10, 2011. Observations are made for determining the number of hoppers, feed tracks work stations, inline work flow and rotary work flow mechanisms which are present on the two PAKONA make FFS machines used at Dharampal Satyapal Ltd., (DSL) Guwahati. It is observed that the two PAKONA make FFS packing machines operating at DSI, has intermittent operations. It draws the packaging material horizontally off a supply reel by two rollers. It then passes through piercing device with a die and punch where two equidistance holes are made to form a stand up pouch. A folded W is then formed by converting the web with the hel....
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....mation, FFS machines and transfer lines the form, fill and seal (FFS) packing machines under study operating at DSL, Guwahati can be classified as multi station, multi feed track, horizontal FFS packing machine with combined in-line and rotary work flow system. 7. We observe that IIT Delhi professors Dr. Sanjeev Sanghi and Dr. Sudipto Mukherjee has examined the PK-90 packing machines of Pakona make and gave their report in respect of the Noida Unit in October 2010, wherein they have concluded that PK-90 packing machine as 'single track machine'. The Report of Dr. Kore was shown to the Professors of IIT, Delhi for analysis and after studying the Report of Dr. Kore, IIT Delhi professors have given their Report in November 2012, wherein they have declared the Pakona PK-91 model packing machines as 'Single-Track machines'. For ready reference, the relevant part of the Report is reproduced below : Introduction: The scope of this work is to determine 'number of tracks that are available in a Form Fill and Seal (FFS) Packing Machine PK-91 GMP model manufactured by M/s Pakona Engineers (I) Pvt. Ltd., Background 1.1 We have gone through....
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....odel and that this model is a variant of model PK-90 that has been studied by us, modified for production of pouches of different size otherwise the functions and features of both the models are identical. 4. methodology adopted by Dr. Kore 4.1 It is seen that Dr. Kore has surveyed technical literature on automated production systems (Machines) that are used in various automated plants (such as automobile assembly, battery cell assembly and bottle filling) including automated form fill and seal machines. 4.2 A typical automatic FFS Packing Machine may consist of several sub-systems of work stations where the pouches are formed, material (to be packed) is fed in to the formed pouches and filled pouches are sealed as has been identified by Dr. Kore in his report. In technical literature each such process is called a unit operation. It has been stated that Automatic FFS machine can be classified based on these subsystems. Dr. Kore has defined feed tracks' and work station on FFS Packing Machine as under:- 'Feed track' is a device which transfers the maerials (to be packed) from 'Hopper' to the location of work station of the FFS machine where the material (to be packed)....
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..... [Page 3] It is thus evident that the processes in FFS Packing machine are asynchronous 5.5 Productivity of FFS Packing machine can be increased by using additional work station for each operation on the same line or track. Productivity can be optimized by using multiplicity of work stations at specific locations (of the same line or track) that consumer disproportionate processing time. Use of additional work station does not inevitably lead to corresponding increase in productivity, thus the observations of Dr. Kore in Para 2.1.3 of his Report "Productivity of FFS machines can be increased in the proportion of number of work stations used for an assembly or filling operation" is not correct. 5.6. Dr. Kore in his report has failed to relate various work handing mechanism viz a viz machine productivity. Configuration of various types of work handling mechanisms may not be relevant to subject matter unless use of any specified system results in improved productivity. It may be useful for selection of mechanism for the purpose of machine design viz a viz processing time and cost etc. 5.7 For definition of 'line' in reference to FFS Packing machine, we wish to refer....
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.... multiple tracks whereas we have seen several vertical machines having multiple tracks. Conclusion This report defines a 'line' which has been mentioned but not defined in No.11/2010 Central Excise (N.T.) date 27th February, 2010 based on accepted technical literature. We find that a 'track' mentioned in the same is the physical embodiment implementing flow along 'line' A feed track' mentioned in the report by Dr. Kore is a subsystem level classification, and different from 'track' referred to in No. 11/2010 Central Excise (N.T.) dated 27th February, 2010. In view of above discussions and on the basis of study conducted by in past, we reconfirm that FFS Packing Machines PK-90/PK-91 GMP model manufactured by Pakona Engineers (I) Pvt. Ltd. are Horizontal, Single Line, Single Track, duplex machines for forming filling and sealing of pouches. 9. From the Two reports, we observe that Dr. Kore's Report was based on his survey of PK-91 model machine alone and he has not surveyed the operation and features of other FFS Packing Machines that are available in the market. The Report of IIT, Delhi has analyzed the Report of Dr. Kore and categorically states that in the Pakona M....
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....rial are required to be filled in the same pouch. In this case there would be no increase in the productivity of the machine but is necessary for getting the right mix. In the instant case, the filling material is premixed and so multiplicity of feed track is not needed. (v) It is a fact on record that a single laminate roll along with zip is fed into the machine. As the roll moves on, it is folded and sealed from three sides and the sip is embedded in between, by the machine. Then, two cutting knives cut two pouches at the same time. Just because two pouches are cut at the same time, it cannot be called a double track machine. Since a single laminate roll is fed into the machine, it is only a single track machine. 10. Thus, we agree with the findings of the IIT, Delhi Report and hold that the PK-91 GMP Model Packing machine is a 'single track' machine. As per 'Explanation' to Rule 5 of the CTPM Rules, 2010, if there are multiple track or multiple line packing machines, then each one of such track or line shall be deemed to be one individual packing machine for the purposes of calculation of the number of pouches per operating packing machine per month. ....
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.... 6864000 11232000 24960000 3. From Rs. 1.51 to Rs. 2.00 6520800 10670400 23712000 4. From Rs. 2.01 to Rs. 3.00 6520800 10670400 23712000 5. From Rs. 3.01 to Rs. 4.00 6314880 10333440 22963200 6. From Rs. 4.01 to Rs. 5.00 6314880 10333440 22963200 7. From Rs. 4.01 to Rs. 5.00 6314880 10333440 22963200 8. Above Rs. 6.00 6177600 10108800 22464000 For the purposes of this rule, if there are multiple track or multiple line packing machine which besides packing the notified goods in pouches, perform additional processes involving moulding and giving a definite shape to such pouches with a view to distinguish the brand or to prevent the counterfeiting of the goods, etc. Two such tracks or lines shall be deemed to be one individual packing machine for the purposes of calculation of the number of pouches per operating packing machine per month : Provided that in case of multiple track or multiple line packing machine which are incapable of performing such additional processes, one such track or line shall be deemed to be one individual packing machine for the purposes of calcul....
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....oduction by a unit. 12. In the light of the specific finding given by the Tribunal, being the last fact finding authority, to the effect that the machine purchased by the assessee is a single track machine, the duty payable by the assessee on the basis of a single track machine, should have been levied. The Commissioner fell in error in treating the said machine as a two track machine. The order of the Commissioner was rightly set aside by the Tribunal. 13. In our view, no substantial question of law arises for consideration. 14. The appeals fail and are dismissed. 12. We observe that the Pakona made FFS machines available at the Guwahati factory of the Appellant are PK-91 GMP model and that this model is a variant of PK-90 model, modified for the purpose of production of pouches of different sizes, otherwise the functions and features of both the models are identical. Hence, we observe that the decision of the Hon'ble High Court of Allahabad is squarely applicable in this case. Accordingly, we hold that the demand confirmed in this order by treating the two FFS packing machines as 'Double Track Machines' is not sustainable. Since the deman....