Deferred excise duty on reinstalled packing machines carries no interest when paid on the following month's due date.

Where packing machines are reinstalled after the 5th day of a month, duty under the Pan Masala (Capacity Determination & Collection of Duty) Rules, 2008 arises on the 5th day of the following month, not on the 5th day of the same month. Applying the third proviso to Rule 9 and its earlier ruling on the same issue, the Tribunal held that duty paid on the next month's due date was timely and no interest was chargeable on that component. The interest demand was therefore set aside and consequential relief followed.

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Issues: Whether central excise duty on packing machines reinstalled during a month after the 5th day of that month was payable on the 5th day of the same month or on the 5th day of the following month, and whether interest was chargeable on duty paid on the following month's due date.

Analysis: The controversy turned on the third proviso to Rule 9 of the Pan Masala (Capacity Determination & Collection of Duty) Rules, 2008. The Tribunal held that the question was no longer res integra in view of its earlier decision applying the same rule to reinstallation of machines. On that basis, where machines are reinstalled during the month after the 5th day, the duty liability does not arise on the 5th of that month but on the 5th day of the following month. Since the duty was paid accordingly on the next month's due date, no interest could be sustained on that component.

Conclusion: The interest demand sustained by the Commissioner (Appeals) was unsustainable and was set aside; the appeal was allowed with consequential relief.

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