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2015 (4) TMI 739 - CESTAT NEW DELHI

2015 (4) TMI 739 - CESTAT NEW DELHI - 2016 (343) E.L.T. 662 (Tri. - Del.) - Duty liability in respect of pan masala retail pouches - pouch packing machine - whether the machine is to be treated as two track machine and hence it is to be treated as two machines or it is to be treated as single track machine - Held that:- In a multi track machine, there are more than one parallel path traced by the pouches as they are formed and later filled and all the pouches in the same track follow the same pa .....

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15/10/10 of IIT Professor Shri S. Sanghi of Applied Mechanical Department and Professor Shri S. Mukherjee of Mechanical Engineering Department of IIT, Delhi. This report also clearly classifies the machine, in question, as a single track duplex machine. In our view there is absolutely no basis for the Commissioner s finding that it is a multiple track machine. Just because the speed of this machine is much higher than the normal machines, it cannot be treated as a multiple track machine. - .....

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nsiderable difference between their speeds, and there is no provision that duplex is to be treated as two machines, Rule 5 of PMPM Rules and the Notification No. 42/08-CE cannot be interpreted to treat such a machine as two machines. - It is only in the year 2015 that by Notification No. 5/2015-CE (NT) dated 01/3/15, Rule 4 of PMPM Rules was amended to provide that maximum packing speed at which such packing machines can be operated for packing of notified goods of various RSPs would also be a r .....

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amendments - impugned order is not sustainable. The same is set aside. - Decided in favour of assessee. - Excise Appeal Nos. 1457-1461 and 1716 of 2012 - Final Order No. 50872-50877/2015 - Dated:- 25-3-2015 - Hon ble Shri Rakesh Kumar, Member (Technical ) And Hon ble Shri S.K. Mohanty, Member (Judicial),JJ. For the Appellant : Shri T.R. Rastogi, Advocate For the Respondent : Shri Yashpal Sharma, Authorized Representative (DR) ORDER Per. Rakesh Kumar :- The facts leading to filing of this appeal .....

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ce President (Technical Services) and Vice President (Purchase) respectively of the appellant company. Shri Naresh Dhir and Shri Amit Singhal are the General Manager (Procurement) and General Manager (Legal) respectively of the appellant company. Shri Rohit J. Shah is the Director of M/s Pakona Engineering (I) Pvt. Ltd. (hereinafter referred to as PKIL), GIDC, Vadodara who has supplied pouch packing machine, which is the subject matter of dispute in this case, to the appellant company. 1.2 The p .....

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e machinery was received in the factory of the appellant company on 01/11/08. On 03/11/08 the appellant company filed an intimation to the Jurisdictional Deputy Commissioner as per the requirement of Rule 13 (2) of the PMPM Rules. The packing machine was physically verified and sealed on 07/11/08 in an uninstalled condition. On 17/11/08 and 19/11/08, the appellant company intimated the Jurisdictional Deputy Commissioner, Central Excise that they intend to operate the newly acquired packing machi .....

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n respect of the newly acquired packing machine. This machine was used by the appellant company for manufacture of 18 gm. zipper pouches of pan masala. On 15/7/10, the Jurisdictional Central Excise officers visited the factory and conducted verification of the PK-90 GMP model machine. As mentioned in para 1 of the show cause notice dated 15/7/11 which was subsequently issued, the working of the machine PK-90 GMP was found as under :- Single laminate roll along with zip is fed in to the machine. .....

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h pan masala by two pouch fillers and a sealer seals the two pouches simultaneously and then the said two pouches come out of the machine on the conveyor belt. Thereafter, the pouches are picked up manually for further weighment and mega packing . 1.3 The above working of the machine was also videographed by the investigating officers. The speed of this machine was found to be 150 pouches of 18 grams per minute. On inquiry, the officials of the appellant company informed the Departmental officer .....

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the specifications of this machine through the website of suppliers PKIL, Vadodara, it was found that this machine has been described by them as Duplex machine with the speed of 180 pouches per minute while the simplex model of this machine produced upto 80 pouches per minute. According to the Department, as per the technical specifications of the supplier PKIL, Vadodara, the machine appeared to be a double track machine which in terms of provision of Rule 5 of the PMPM Rules and of the Notific .....

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uches during period from November 2008 to July 2010 alongwith interest thereon under Section 11AB and also for imposition of penalty on the appellant company under Rule 17 of the PMPM Rules. Subsequently, another show cause notice dated 15/7/11 was issued to Shri Rajiv Kumar, CMD of appellant company, Shri Chiranjiv Roy Choudhory, Senior Vice President to the appellant company, Shri J.D. Desai, Vice President (Purchase), Shri Naresh Dhir and Amit Singhal, General Manager (Procurement) and Genera .....

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. November 2008, the date on which it was installed the duty would be chargeable in respect of this machine accordingly ; (b) confirmed the duty demand of ₹ 25,98,69,504/- against the appellant company under proviso to Section 11A (1) of Central Excise Act, 1944 alongwith interest thereon under Section 11AB of Central Excise Act, 1944; (c) imposed penalty of ₹ 25,98,69,504/- on the appellant company under Rule 17 of the PMPM Rules readwith Section 11AC of Central Excise Act, 1944 ; a .....

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l types of form, fill and seal (FFS) machines by whatever name called whether Vertical or Horizontal, with or without caller, single track or multi track or any other type of packing machines used for packing, of pouches of notified goods, that the machine, in question, PK-90 GMP machine is a duplex machine which produces two pouches simultaneously on a single line, that Explanation to Rule 5 of PMPM Rules readwith its proviso and Notification No. 42/08-CE dated 01/7/08 provides that in the case .....

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e term multiple track or multiple line packing machine has been given, this term should be construed as it is understood in common parlance, that in multiple track machines there are more than one line or track for production of retail pouches while in single track machine there is only one such line of production of pouches, that the machine, in question, is a single track duplex machine in the sense that only single laminate is fed into the machine alongwith zip and two pouches are produced at .....

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CX dated 24/1/14, the factor relevant for production on the basis of which the excise duty is leviable has been notified as the number of packing machines in the factory of the manufacturer and the deemed production per operating machine per month, as prescribed in Rule 5 of PMPM Rules, is based on the average speed of the packing machine and the average working hours of the factory and the excise duty is chargeable at the rates notified on the basis of retail rate price as notified under Notifi .....

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chine, that Apex court in the case of CC (Import), Mumbai vs. Konkan Synthetic Fibres reported in 2012 (278) E.L.T. 37 (S.C.) has held that while interpreting an expression used in a particular taxing entry, opinion of the experts in field of the trade, who deal with those goods, should not be ignored and should be given due importance, that the finding of the Commissioner in para 7.5.9 of the impugned order that in the machine, in question, there are more than one directions or tracks or lines .....

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appellant in form I in terms of Rule 6 of the PMPM Rules, that once the declaration has been accepted vide order No. 6/08 dated 19/11/08,without reviewing this order of the Assistant Commissioner, the matter cannot be reopened and the duty cannot be demanded on the basis that the machine, in question, is a two track machine, and that in any case, there is absolutely no justification for imposition of penalty under Rule 26 on Shri R.J. Shah, Director of the machinery supplier PKIL, Vadodara or o .....

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fore, pleaded that the impugned order is not sustainable. 4. Shri Yashpal Sharma, the learned DR, defended the impugned order by reiterating the findings of the Commissioner and emphasised that since admittedly the speed of production of the machine, in question, is almost twice the machine of the similar machine of the simplex model, the same has to be treated as two track machine and the duty has to be charged accordingly. He, therefore, pleaded that there is no infirmity in the impugned order .....

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ral Government to make rules in respect of the goods specified under Section 3A (1) for determining the annual capacity which shall be deemed to be the annual production of such goods by the factory or specify the factors relevant to the production of such goods and the quantity that is deemed to be produced by the use of a unit of such factor. Gutkha and pan masala packed in retail pouches for sale has been notified under Section 3A (1) for assessment of duty under Section 3A. In this regard th .....

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pouches per machine per month is 37,44,000. The same is deemed production per machine per month in respect of the pouches of RSP slab ₹ 1.01/- to ₹ 1.50/-. For pouches RSP slabs from ₹ 1.51/- to ₹ 2/-, the deemed production per machine per month is 35,56,800 and same is the deemed production per machine per month in respect of the pouches of the RSP of ₹ 2.01/- to ₹ 3/- and so on. For pouches of RSP above ₹ 6/- the deemed production per machine per mont .....

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d keeping in view the average speed of the machine and the average number of working hours in a day and average number of working days in a month. Having specified the deemed production per machine per month for the pouches of different RSP slabs, the assessment of duty has not been left to the assessing officers. Instead, Notification No. 42/08-CE dated 01/7/08 issued under Section 3A (4) of the Act specifies the total rate of duty per machine per month for different RSP slabs and this duty inc .....

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r Notification No. 42/08-CE for different RSP slabs and for this purpose in case of multiple line/multiple track machine, where the multiple track are not for performing additional processes involving moulding or giving definite shape to pouches with a view to distinguish the brand or to prevent the counterfeiting of the goods, each track is to be treated as one single machine. The Board vide Circular No. 980/4/14-CX dated 24/1/14 has clarified that in the cases where the actual production of th .....

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at a time and therefore the speed of production of this machine is about two times the packing speed of simplex model of such machine. The point of dispute is as to whether this is to be treated as two track machine and hence it is to be treated as two machines or it is to be treated as single track machine. 9. In a multi track machine, there are more than one parallel path traced by the pouches as they are formed and later filled and all the pouches in the same track follow the same path. The m .....

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es are cut and filled as a result of which two pouches are formed, filled and sealed resulting in much higher speed of production of pouches. This is clear from the report dated 15/10/10 of IIT Professor Shri S. Sanghi of Applied Mechanical Department and Professor Shri S. Mukherjee of Mechanical Engineering Department of IIT, Delhi. This report also clearly classifies the machine, in question, as a single track duplex machine. In our view there is absolutely no basis for the Commissioner s find .....

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ltiple track or multiple line machines, these terms are to be construed in the sense in which the same are understood in trade parlance and accordingly the multiple track or multiple line machines are those in which there are more than one path traced by the pouches, as they are formed and later filled and all the pouches in the same track follow the same path. This feature is not there in the machine, in question, which is duplex model of PK-90 GMP machine, as against its Simplex model. Neither .....

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