TMI Blog2019 (1) TMI 1097X X X X Extracts X X X X X X X X Extracts X X X X ..... oes not appear to be so. The absence of parallel processing of pouches inclines us to discard the contention of Learned Special Counsel for Revenue that the machines installed by the assessee are ‘multiple track/multiple line’. Despite the elimination of lead time in collecting the ‘unmanufactured tobacco’ for each pouch, it is yet only one pouch that can be filled at any single point in time. That is a clear articulation of the intent. The lure of revenue maximization that may have motivated the initiation of proceedings cannot support the stated intent. In the absence of any evidence that the higher capacity was not merely a consequence of enhancing efficiency of existing machines, the grounds of appeal cannot sustain - appeal dismissed - decided against Revenue. - APPEAL NOS: E/85695, 86428 to 86437/2017, CROSS-OBJECTION NO. E/CO-91086/2017, MISCELLANOUES APPLICATION NO: E/MISC/85893/2018 - A/85096-85106/2019 - Dated:- 17-1-2019 - Shri C J Mathew, Member (Technical) And Shri Ajay Sharma, Member (Judicial) Shri V Sridharan, Senior Advocate with Shri Gajendra Jain, Advocate for appellant Shri KM Mondal, Special Counsel for respondent ORDER Per: C J ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... , Mumbai, Indian Institute of Technology, Roorkee, the certificate of Shri SG Desphande, Chartered Engineer as well as the physical verification report of a committee of departmental officers, dropped further proceedings. These authorities also placed reliance on the decision of the Tribunal in Dharampal Satyapal Ltd v. Commissioner of Central Excise, Noida [2016 (343) ELT 662 (Tri.Del.)] upheld by the Hon ble High Court of Allahabad in Commissioner of Central Excise v. Dharampal Satyapal Ltd [2016 (333) ELT 283 (All.)], and circular no. 980/04/2014-CX dated 24th January 2014 of Central Board of Excise and Customs directing recovery to be strictly in accordance with the deemed production and not on the actual production. 4. Initiating the arguments on behalf of Revenue, Learned Special Counsel informed that the respondent had installed form, fill and seal machines which packed retail pouches and that, according to rule 4 of the said Rules, the number of packing machines is the critical factor for computation of the duty liability, with the definition of packing machines in rule 2(b), along with the Explanation to rule 5 narrated supra, sufficing to uphold the recovery pr ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ording to Learned Senior Counsel appearing for the assessee, the Rules offer no scope for rendering beyond the letter therein and drew our attention to the provisions as it stood prior to 1st March 2015, for the period between 1st March 2015 and 1st March 2016, and for the period thereafter. It is his submission that reliance on the decision of the Hon ble High Court of Allahabad in Commissioner of Central Excise v. Dharampal Satyapal Ltd [2016 (333) ELT 283 (All.)] is appropriate as the primary opinion relied upon in the show cause notice stood discredited with the second report of the Veermata Jijabai Technological Institute and that of the reputed Indian Institute of Technology opining similarly. 7. It would appear that the complexities of levy on ad valorem basis on goods produced for the retail market and the imperative to safeguard the interest of the public exchequer prompted the Central Government to invoke this alternative method of assessment enabled by section 3A of Central Excise Act, 1944. The pre-requisite for the alternative is the notification of rules providing for the manner in which annual capacity of production of the factory is to be determined by a compet ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... machines as the relevant factor. On a perusal of the Rules, it is seen that the Deputy Commissioner/Assistant Commissioner is, on receipt of the declaration filed by the manufacturer under rule 6(1) upon the notification coming into force or upon a new unit coming into existence, required to determine the capacity of production. As per rule 6(3), the annual capacity is to be computed by application of the appropriate quantity, i.e. deemed to be produced by use of one packing machine, as per the table, to the number of packing machines in the factory during the month beginning with the one when the capacity is determined. The Explanation that has been sought to be relied upon by the central excise authorities prescribes the multiplication of the number of pouches by the number of tracks or lines if multiple tracks or multiple line machines are installed in the factory. The declaration to be filed by the manufacturer was also to specify the number of multiple track or multiple line machines that are available, installed and intended to be operated. 9. Rule 6(6) also prescribes that in the event of replacement, alteration or introduction of any new machine, or disposal, discontinu ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... to be so. The absence of parallel processing of pouches inclines us to discard the contention of Learned Special Counsel for Revenue that the machines installed by the assessee are multiple track/multiple line . Despite the elimination of lead time in collecting the unmanufactured tobacco for each pouch, it is yet only one pouch that can be filled at any single point in time. 12. Undoubtedly, production has speeded up and the total production was enhanced by leaps and bounds after introduction of the capacity regime. The wherefores and whyfores notwithstanding, in circular no. 980/4/2014-CX dated 24th June 2014 of the Central Board of Excise and Customs, which have been relied upon in the impugned orders, particular significance is attached to 2. Under the compounded levy scheme, excise duty is chargeable with respect to deemed production based on the number of packing machines in the factory of the manufacturer. The issue raised is whether excise duty can be re-determined based on the speed of the packing machine and actual production thereof, which may be higher than the deemed production. 3. ... In order to minimize the element of subjectivity and to ensur ..... X X X X Extracts X X X X X X X X Extracts X X X X
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