2016 (3) TMI 347 - AT - Central Excise

Entitlement to interest on refunds - duty was deposited when no production was made - Rule 9 of Pan Masala Packing Machines (Capacity Determination and Collection of Duty) Rules, 2008 - Held that - As is evident from the chart relating to all four appeals, there were no machines installed at the beginning of the month and operations commenced only in the middle of the month and therefore as per Rule 9 of the said Rules no duty would be payable by 5th of the month when no machines were operational and as a consequence the case would fall under the 4th proviso of Rule 9 of the said Rules. The impugned interest was not recoverable from the appellant and therefore the appellants are entitled to refund of the interest so recovered from them

Summary

Issues:
- Refund of interest on duty deposit delay under Pan Masala Packing Machines Rules, 2008.

Analysis:
1. Refund Claim Rejection: The appeals were filed against orders rejecting refund claims for interest on duty deposit delay as per Rule 9 of Pan Masala Packing Machines Rules, 2008. The duty was supposed to be deposited by the 5th of the month to which it pertained, but it was deposited after this date, leading to interest recovery.

2. Appellant's Argument: The Appellant argued that no machines operated at the start of the month, allowing duty deposit by the 5th of the following month as per Rule 9 proviso. They contended that duty was paid before the 5th of the following month or within the same month, making interest leviable and recoverable.

3. Department's Position: The Department supported the impugned order, emphasizing the interest recovery on duty deposit delay.

4. Judicial Analysis: The Tribunal considered both sides' contentions and observed that no machines were operational at the beginning of the month, falling under the 4th proviso of Rule 9. The Tribunal cited a previous CESTAT Final Order (No. 53520/2015) to support this interpretation. The cited order highlighted the obligations under Rules 6 to 13, emphasizing the payment of duty for the period when the machines were inoperative, leading to a refund of the interest recovered.

5. Final Decision: Based on the analysis, the Tribunal concluded that the interest recovered was not justifiable, entitling the appellants to a refund. Therefore, the appeals were allowed, granting consequential relief to the appellants.