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2016 (2) TMI 718 - AT - Central ExciseInterest on account of late remittance of central excise duty - delay by 22 days from July, 2013 - Held that - On true, fair and interactive analysis of the Rules and in particular Rules 6 to 13 the conclusion is irresistible and compelling that where during any period, a manufacturer intimates its intention not to operate a packing machine and the same is sealed by the authorized officers, such machine is deemed have been uninstalled in terms of Rule 6(5). Third proviso to Rule 9 provides that in case of increase in the number of operating packing machines in the factory during the month on account of addition or installation of packing machines, the differential duty amount, if any, Shall be paid by the 5th day of the following month. In the facts of this case, the sealing of the 12 machines of the appellant occurred prior to 1.7.2013. The machines were inoperative during 1.7.2013 to 7.7.2013. The machines were unsealed and reinstalled on 8.7.13. This is evident from the abatement order dated 20.9.2013. In the circumstances under the third proviso to Rule 9, the duty was payable by the 5th of August, 2013. Duty was in fact paid on 27th July, 2013. There is therefore no delayed payment of duty warranting levy of interest under Section 11AA of the Act.
Issues: Liability for interest on late remittance of central excise duty, Interpretation of Packing Machine Rules, Applicability of third proviso to Rule 9
The judgment pertains to an appeal against an order confirming liability for interest on late remittance of central excise duty. The appellant, a manufacturer of pan masala and chewing tobacco, had paid duty late for July 2013, resulting in a liability of Rs. 1,64,910. The appellant argued that due to the inoperability of 12 packing machines from 1.7.13 to 7.7.13, they should be considered uninstalled until reinstalled on 8.7.13, invoking the third proviso to Rule 9 of the Packing Machine Rules. The contention was that no interest was due as the duty was paid within the stipulated time after reinstallation. The Rules require duty payment by the 5th of the month and specify procedures for installation, operation, and duty payment based on the number of operating packing machines in the factory. The judgment delves into the detailed provisions of the Packing Machine Rules, emphasizing the interplay between Rules 6 to 13. Rule 8 mandates filing a declaration specifying the number of packing machines in the factory, with duty calculated based on the operating machines. Rules 6(4) and 6(5) differentiate between installed and operating machines, with the latter to be sealed if not intended for operation. The third proviso to Rule 9 stipulates payment for additional operating machines by the 5th of the following month. The analysis concludes that sealing machines as per Rule 6(5) deems them uninstalled, triggering the provisions of the third proviso to Rule 9 for duty payment. The judgment interprets the application of the third proviso to Rule 9 in the appellant's case, where the machines were sealed before 1.7.13, remained inoperative until 7.7.13, and were reinstalled on 8.7.13. As per the abatement order, duty was payable by 5th August 2013, which was met on 27th July 2013. Consequently, the court held that no delayed payment occurred, precluding the imposition of interest under Section 11AA of the Act. The appellant's argument that the duty was paid within the stipulated time after reinstallation was upheld, leading to the allowance of the appeal and setting aside of the impugned order without costs. This comprehensive analysis of the judgment highlights the key issues of liability for interest on late duty remittance, the intricate interpretation of the Packing Machine Rules, and the successful application of the third proviso to Rule 9 in the appellant's favor.
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