TMI Blog2017 (6) TMI 1063X X X X Extracts X X X X X X X X Extracts X X X X ..... cise, Lucknow, whereby duty has been demanded of ₹ 3,25,00,000/- with interest under Section 11(1) of the Act. 2. The brief facts of the case are that upon introduction of the Pan Masala Packaging Machines (Determination of capacity and collection of duty) Rules, 2008 (hereinafter referred to as the Rules, 2008), with effect from 01.07.2008 the appellant who was an existing manufacturer of Pan Masala and Gutkha, was having 48, packing machines available in their factory. Further, admitted facts are that 4 packing machines were lying sealed prior to 01/07/2008. Out of the balanced 44 machines, the appellant applied for sealing of 26 machines on 02/07/2008, which were duly sealed by the Central excise authorities on 03/07/2008 at 9:30 AM. The appellant filed the requisite declaration in form-I, under the said rules on 10 th July 2008 within the time permitted, declaring that they intend to operate 18 packing machines having speed of 125 pouches per Minute of MRP ₹ 1 each. In response to which an order dated 17/07/2008 was passed determining the 'Annual Capacity of Production' for 48, packing machines. The said order further says, after making necessary inquir ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Pan Masala all having MRP not exceeding ₹ 1 . Accordingly, it was also urged to rectify the order dated 17/07/2008, determining the 'Annual Capacity Production' along with monthly duty liability taking into consideration, the facts available on record. 3. Thereafter, it appears, the revenue slept over the matter for some time without acting on the said re-presentation or the objection dated 24/07/2008, and issued show cause notice dated 07/08/2009, that is after almost one year, alleging therein that the appellant had filed declaration on 10/07/2008 from which, it was apparent that 48, packing machines were shown to be available in the factory, out of 48 machines 16 machines intended to be used in the manufacture of Gutkha of ₹ 1.00 MRP per pouch and 2 machines intended to be used in the manufacture of Sada Pan Masala of ₹ 1.00 per pouch. The remaining 30 machines were shown as already sealed. It is further alleged that in compliance to Rule 6(2) of the Pan Masala Packaging Machine Rules, 2008, the Deputy Commissioner, Central Excise Division-I conducted verification on 16/07/2008 and during the course of verification and thereafter on investigation fou ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... entral Excise Rules, 2002. 4. The said show cause notice was adjudicated vide the impugned Order-in-Original by learned Commissioner, who was pleased to drop the demand of ₹ 50,00,000/- being demanded on 04 packing machines which were admittedly out of order and sealed prior to 01/07/2008, and further confirm the demand for the balance 44 machines amounting to ₹ 3,25,00,000/- and further pleased to drop the proposed penalty. Being aggrieved, the appellants are before this Tribunal. 5. The learned counsel for the appellant Mr. Amit Awasthi has pointed out that the very basis of show cause notice is wrong and vague. Firstly, it is evident from the order dated 17/07/2008 determining the Annual Capacity of production that there is no basis of the said order, by which the declaration made by the appellant, that they intend to operate 18 packing machines, have been rejected. The order says that after making necessary inquiry including physical verification, but no such report is referred or brought on record, neither any show cause notice issued to the appellant. Further, in the show cause notice dated 07/08/2009, also in para-5.2 it is mentioned-whereas in complianc ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... part of the year only, the annual production thereof shall be calculated on proportionate basis of the annual capacity of production: provided further that in a case where the factor relevant to the production is altered or modified at any time during the year, the annual production shall be re-determined on a proportionate basis having regard to such alteration or modification. 6. The learned Counsel further states that the order dated 17/07/2008 passed by the Deputy Commissioner determining the annual capacity of production is prima facie wrong, and in conflict with the provisions of Section 3A of the Central Excise Act. Inspite of the admitted facts, as is evident from the show cause notice, that 26 machines were sealed on 03/07/2008 at 9:30 AM and 04 machines were lying sealed prior to 01/07/2008, totaling 30, there remained only 18 packing machines which were intended to be operated and the said fact have not been found to be wrong or mis-declared by the Department. In this view of the matter, both the order dated 17/07/2008, as well as the impugned order are bad and fit to be set aside. 7. The learned A.R. for revenue have relied on the impugned order. 8. Having c ..... X X X X Extracts X X X X X X X X Extracts X X X X
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