IMPORTANT POINT
The court ruled that the Principal Commissioner's order was invalid due to failure to consider prior findings and the petitioner's submissions, violating principles of natural justice.

JUDGMENT :

Soumitra Saikia, J.

These writ petitions challenge the order-in-original No. 05/Pr.Commr./CE/GHY/2021-22 dated 24.03.2022 passed by the Principal Commissioner, GST & Central Excise Commissionerate, Guwahati whereby the demand of recovery of Central Excise in terms of the Notice issued under Section 11A (10) of the Central Excise Act, 1944 read with Rule 18 of the Pan Masala Packing Machines (Capacity of Determination and Collections of Duty) Rule, 2008 (hereinafter referred to as “the Rule of 2008”) as well as recovery of interest and penalty was imposed. The particulars in respect of each of the writ petitions will be discussed later in the Judgment.

2. Since W.P(C) No. 3864/2022 (Dharampal Satyapat Ltd) was argued by the respective counsel as the lead case, the facts relating to this particular case are discussed. The other writ petitions have similar facts and circumstances which will be referred to later in the judgment.

3. The writ petitioner in WP(C) No. 3864/2022 is a company incorporated under the Companies Act 1956, having its registered office in Delhi. The petitioner has an industrial unit in the city of Guwahati in the state of Assam. The petitioner is registered under the Central Excise Act 1944 and has registration number AAACD0132HXM030. The petitioner is engaged in the manufacture of ‘Pan Masala’. The said item, according to the petitioner, is classified under Tariff Entry 2106 90 20. The petitioner company is represented by its Deputy General Manager of the said company.

4. It is the case of the petitioner projected before this Court that the Central Excise Duty payable by the petitioner company for manufacture of its product, i.e., Pan Masala, is based upon the annual capacity of production of its factory determined in accordance to the provisions of the Rules, read with Notification No. 42/2008-CE dated 01.07.2008, which lays down the rate of duty on the basis of which the Central Excise Duty liability is to be calculated. In other words, the duty payable by the petitioner is to be calculated on the basis of a number of operating packing machines and the maximum packing speed of a packing machine.

5. It is submitted on behalf of the petitioner that in the month of January 2014, the petitioner company purchased packing machines from ‘Sanko Machinery Company Limited’, Japan for manufacturing pan masala (without tobacco) pouches. As per the product specification specified in the quotation of the machine, estimated speed of the machine was 900 to 1000 pouches per minute for a pouch length of 90 mm containing 18 to 22 grams of pan masala. During the pre-delivery trial run of the machine in Japan, the machine was found to have encountered some technical issues and the petitioner company was advised by the supplier company namely ‘Sanko Machinery Company Limited’ to operate the machine at optimum speed around 750 pouches per minute and to observe the results before it could be operated at its rated speed of 900 to 1000 pouches per minute. The petitioner company accordingly placed orders for the machinery and the same was delivered to the factory premises of the petitioner company. As is required in terms of the Rules of 2008, the petitioner company decided to declare the maximum speed of the machine as experienced by it during the pre-delivery trial run of the machine which is 700 pouches per minute. The first declaration for the machine under the rules was filed by the petitioner on 09.01.2014 for operating the machinery with effect from 18.01.2014 for packing pan masala in 20 grams pouches. The maximum packing speed was accordingly declared as required under the Rules in Form-1 as 750 pouches per minute. The said declaration that the maximum packing speed of the machine was 750 pouches per minute as declared by the company was duly approved by the Assistant Commissioner of Central Excise by order dated 17.01.2014. As is required under the Rules, similar declarations were filed till June, 2014 which were also