Differential duty on new packing machine arises only from installation date, not for the earlier part of the month.

Rule 9 of the Pan Masala Packing Machines (Capacity Determination and Collection of Duty) Rules, 2008 requires differential duty only when the number of operating packing machines increases during a month due to addition or installation, with liability arising from the date of installation. On the admitted facts, the third machine was installed on 10 June 2013, so duty could not be demanded for the earlier period from 1 June 2013 to 10 June 2013 on an assumed basis. The proportional discharge of duty was treated as consistent with section 3A of the Central Excise Act, 1944, and the differential duty for that earlier period was held unsustainable.

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Issues: Whether differential duty was payable for the period 1 June 2013 to 10 June 2013 on the basis of a packing machine installed on 10 June 2013.

Analysis: Rule 9 of the Pan Masala Packing Machines (Capacity Determination and Collection of Duty) Rules, 2008 provides that where the number of operating packing machines increases during a month because of addition or installation of machines, any differential duty amount is payable by the 5th day of the following month. On the admitted facts, the third machine was installed on 10 June 2013. The liability to pay duty could therefore arise only from the date of installation and actual production, and not on an assumed basis for the earlier part of the month. The proportional discharge of duty was also consistent with the scheme of section 3A of the Central Excise Act, 1944.

Conclusion: Differential duty for 1 June 2013 to 10 June 2013 was not sustainable and was liable to be set aside.

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