Sealed packing machines treated as uninstalled; duty paid within time, so no interest under excise law was leviable.

Where packing machines are sealed by departmental officers after intimation that they will not be operated, they are treated as uninstalled under Rule 6(5) of the Packing Machine (Capacity Determination and Collection of Duty) Rules, 2008. If such machines are later unsealed and reinstalled during the month, the third proviso to Rule 9 governs duty payment, and the differential duty becomes payable by the 5th day of the following month. On the stated facts, the machines were sealed before 1 July 2013, remained inoperative until 7 July 2013, were reinstalled on 8 July 2013, and duty paid on 27 July 2013 was therefore within time. No delayed payment arose, so interest under section 11AA of the Central Excise Act, 1944 was not leviable.

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Issues: Whether interest was leviable under section 11AA of the Central Excise Act, 1944 on duty paid before the extended due date where the packing machines were sealed, treated as uninstalled, and later reinstalled during the month under the Packing Machine (Capacity Determination and Collection of Duty) Rules, 2008.

Analysis: The scheme of Rules 6 to 9 treats the number of operating packing machines with reference to machines installed and actually intended to be operated. Where a manufacturer intimates that a machine will not be operated and the machine is sealed by the departmental officers, it is deemed to have been uninstalled under Rule 6(5). In that situation, if the machines are later unsealed and reinstalled during the month, the third proviso to Rule 9 governs the duty payment, making the differential duty payable by the 5th day of the following month. On the facts, the machines were sealed before 1.7.2013, remained inoperative till 7.7.2013, and were reinstalled on 8.7.2013. Duty was paid on 27.7.2013, which was before the due date under the applicable proviso.

Conclusion: No delayed payment of duty occurred and interest under section 11AA of the Central Excise Act, 1944 was not leviable; the assessee succeeded and the demand was unsustainable.

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