Interest on delayed duty payment was not leviable where a pan masala packing machine was sealed or partially operated.

Under the Pan Masala Packing Machine (Capacity Determination and Collection of Duty) Rules, 2008, interest was examined only in relation to delayed duty payment for a month in which the packing machine was not fully operating. The reasoning treated a sealed or uninstalled machine as not operating for the relevant period, and relied on earlier Tribunal rulings applying the same rules. On that basis, payment of duty after the due date in circumstances of partial operation did not justify levy of interest as demanded by the revenue. Interest on the alleged delayed payment was therefore held not leviable, and the demand was set aside.

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Issues: Whether interest was payable on the delayed payment of duty under the Pan Masala Packing Machine (Capacity Determination and Collection of Duty) Rules, 2008 for the relevant month.

Analysis: The duty liability was examined in the context of Rules 6 to 10 of the Pan Masala Packing Machine (Capacity Determination and Collection of Duty) Rules, 2008. The reasoning proceeded on the footing that where a packing machine is sealed or kept uninstalled during the relevant period, the statutory scheme treats it as not operating for that period. Applying the earlier Tribunal decisions on the same rules, the payment of duty after the due date, in the same month and in the circumstances of partial operation of the machine, did not justify fastening interest in the manner adopted by the revenue authorities.

Conclusion: Interest on the alleged delayed payment was not leviable, and the demand was liable to be set aside.

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