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Issues: (i) Whether duty for machines operated only for part of a month was payable on a pro rata basis for the actual period of operation or for the whole month on the basis of deemed operation under the packing machine rules; (ii) Whether the assessee was entitled to suo motu abatement for the period when the machines remained sealed or the factory was partially closed.
Issue (i): Whether duty for machines operated only for part of a month was payable on a pro rata basis for the actual period of operation or for the whole month on the basis of deemed operation under the packing machine rules.
Analysis: The monthly duty scheme under the packing machine rules had to be read as a whole. Rule 7 provided the formula for monthly duty, Rule 8 dealt with the manner of determining the number of operating machines, and the fourth proviso to Rule 9 specifically provided for recalculation of duty where manufacture of a new retail sale price commenced during the month or an existing retail sale price was discontinued during the month. That proviso was not redundant and qualified the general monthly computation. Applying that framework, duty could not be demanded for the entire month where the relevant machines were used only for part of the month in circumstances covered by the proviso.
Conclusion: Duty was payable only on the pro rata basis for the relevant period and not for the whole month. This issue was decided in favour of the assessee.
Issue (ii): Whether the assessee was entitled to suo motu abatement for the period when the machines remained sealed or the factory was partially closed.
Analysis: Rule 10 contemplated abatement where the statutory conditions for closure and sealing were satisfied. The absence of an express requirement in the rules to first pay full duty and then seek separate abatement meant that, once the conditions were met and the machines were sealed in accordance with the procedure, reduced payment on a proportionate basis was permissible. The contrary view would make the abatement mechanism ineffective and was not consistent with the earlier binding line of decisions relied upon by the Tribunal.
Conclusion: Suo motu abatement was permissible on the facts, and the demand for the sealed period was not sustainable. This issue was decided in favour of the assessee.
Final Conclusion: The demand, interest, and penalty could not be sustained, and the impugned order was set aside with consequential relief.
Ratio Decidendi: In monthly duty schemes for packing machines, the specific recalculation and abatement provisions operate as qualifying exceptions to the general monthly levy, and duty must be computed on a pro rata basis where the statutory conditions for partial commencement, discontinuance, or sealed closure are satisfied.
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