CUSTOMS, EXCISE AND SERVICE TAX APPELLATE TRIBUNAL CHANDIGARH REGIONAL BENCH - COURT NO. I Excise Appeal No. 55215 of 2014 [Arising out of Order-in-Original No. 36/CE/CHD-II/2014 dated 02.07.2014 passed by the Commissioner, Central Excise & ST, Commissionerate Chandigarh-II ]

Commissioner of Central Excise and ……Appellant Service Tax, Chandigarh II Central Revenue building, Plot No. 19 Sector 17-C, Chandigarh 160017 VERSUS M/s Tej Ram Dharam Paul ……Respondent Factory Road, Mayr Mandi, Bathinda Punjab 151509 WITH Excise Appeal No. 55753 of 2014 [Arising out of Order-in-Original No. 36/CE/CHD-II/2014 dated 02.07.2014 passed by the Commissioner, Central Excise & ST, Commissionerate Chandigarh-II ]

Commissioner of Central Excise and ……Appellant Service Tax, Chandigarh II Central Revenue building, Plot No. 19 Sector 17-C, Chandigarh 160017 VERSUS M/s Tej Ram Dharam Paul ……Respondent Factory Road, Mayr Mandi, Bathinda Punjab 151509 APPEARANCE:

Shri Goverdhan Dass Bansal, Authorized Representative for the Appellant Shri Ashwani Sharma, Advocate for the Respondent CORAM: HON’BLE MR. S. S. GARG, MEMBER (JUDICIAL) HON’BLE MR. P. ANJANI KUMAR, MEMBER (TECHNICAL)

FINAL ORDER NO. 60139-60140/2026 DATE OF HEARING: 09.10.2025 DATE OF DECISION:12.02.2026 S.S.GARG:

The Revenue has filed these two appeals against the common impugned order dated 02.07.2014 passed by the Commissioner of Central Excise, Chandigarh vide which the learned Commissioner has dropped the proceedings initiated against the respondent vide two separate show cause notices dated 07.02.2011 and 10.03.2011, as the issue in both the appeals is identical, therefore, both the appeals are taken up for discussion and decisions, for the sake of convenience, we may take the facts of appeal No. E/55215/2014.

2. Briefly the facts of the present case are that the respondent is registered with the department and were engaged in the manufacture of branded Chewing Tobacco falling under tariff item No.24039910 and paying Central Excise duty in terms of Section 3A of the Central Excise Act, 1944 in respect of 7 Single Track Form, Fill and Seal (FFS) Machines on the basis of annual capacity determined by the Deputy Commissioner, Central Excise Sangrur under the Chewing Tobacco & Unmanufactured Tobacco Packing Machines (Capacity Determination and Collection of Duty) Rules, 2010 for the period 08.03.2010 to 31.03.2010 and 01.04.2010 to 31.03.2011. In the capacity determination Order, the Deputy Commissioner has not taken filter pillow sachet making machines under Section 3A of the Act confirming that these were not subjected to compounded levy. He had also clarified this issue vide his letter dated 07.04.2010.

2.1 The Central Excise Hqrs. Officers searched the premises of the respondent on 16-6-2010 and the manufacturing process employed by them was ascertained as under:

Nine Form Fill and Pack Machines were found installed and working with the aid of power. Paper Rolls are put on the said machine; tobacco is put into the hoppers fitted on the machines. The machines automatically form the filter pouches or sachets, fill these with chewing tobacco and seal them. The sachets at this stage are without any marks or numbers and do not contain any details of manufacturer, product, health hazards or MRP etc. Then 10 such sachets are manually filled by the labour into Pouches which contain the requisite details of the product, brand, name of the manufacturer, health warning, MRP etc. The Pouches purchased from the market are pre-zipped and pre-sealed from three side (upper side also pre- zipped). Then the pouches containing 10 filter sachets are sealed by the labour with the aid of Continuous Band Sealing Machines which are run on electricity. The process was verified and samples of the filter khaini sachet, sealed pouches containing filter sachets and empty pouches were drawn under Panchnama dated 16-6-2010 Shri Sandeep Kumar son of Shri Ramesh Kumar. authorized signatory of the party in his statement dated