Packing machine duty starts only after proven installation; liability, interest and penalty follow from actual production commencement.

Duty under Rule 18(2) of the Chewing Tobacco and Unmanufactured Tobacco Packing Machine Rules could not be demanded for any period before the packing machine was proved to have been installed and operational. The invoice and related material established purchase on 16.03.2012, and the Department did not rebut that evidence; the Tribunal therefore accepted that the machine could not have been functioning before installation and gave the assessee the benefit of doubt up to 21.03.2012. On the assessee's own case, production commenced on 22.03.2012, so duty, interest and penalty were sustained only from that date onward.

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Issues: Whether duty under Rule 18(2) of the Chewing Tobacco and Unmanufactured Tobacco, Packing Machine (Capacity Determination and Calculation of Duty) Rules, 2010 could be demanded for the period prior to the proved installation and commencement of the packing machine, and whether the remaining demand, interest and penalty were sustainable.

Analysis: The demand had been sustained below on the premise that, in the absence of proof of the installation date, duty was recoverable from the first day of the financial year. The invoice and other material showed purchase of the machine on 16.03.2012, and the Department did not dislodge the genuineness of that evidence. The Tribunal therefore accepted that the machine could not have been operational before its installation and gave the appellants the benefit of doubt for the period up to 21.03.2012. On the appellants' own version, production commenced on 22.03.2012, and duty, interest and penalty were therefore payable only from that date onwards.

Conclusion: Duty could not be demanded for the period prior to 22.03.2012, but the appellants were liable to duty, interest and penalty from 22.03.2012 onwards.

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