Permanent cessation of manufacture governs duty liability; later surrender of registration cannot fasten duty for the next day.

Permanent cessation of manufacturing activity, once intimated to the Department and supported by acknowledgment, was treated as the operative date for duty liability under Rule 16 of the Pan Masala Packing Machine (Capacity Determination and Collection of Duty) Rules, 2008. As no evidence showed use of the machines on 18.07.2012 or thereafter, the later surrender of the registration certificate on 19.07.2012 could not shift duty liability to that day. Duty for 19.07.2012 was therefore not payable, and the duty paid for that date was refundable.

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Issues: Whether the letter intimating surrender of registration certificate on 19.07.2012, or the earlier intimation of permanent cessation of manufacturing activities on 18.07.2012, was the relevant date for computation of duty and entitlement to refund under Rule 16 of the Pan Masala Packing Machine (Capacity Determination and Collection of Duty) Rules, 2008.

Analysis: The appellant had informed the Department on 18.07.2012 that, due to the State ban on manufacture of gutka, manufacturing activities had permanently ceased from that date, and the Department acknowledged receipt of that intimation. There was no evidence that the machines were used for manufacture on 18.07.2012 or thereafter. In these circumstances, the later letter dated 19.07.2012 surrendering the registration certificate could not be treated as the operative date for fastening duty for that day. Since no manufacturing activity was carried on from 18.07.2012, duty for 19.07.2012 was not payable.

Conclusion: The earlier cessation intimation was the relevant date, the duty demand for 19.07.2012 was not sustainable, and the appellant was entitled to refund of the duty paid for that date.

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