2026-VIL-723-GUJ-CE
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CENTRAL EXCISE High Court Cases

Central Excise - Health Security Se National Security Cess Act, 2025 - Computation of Cess on Basis of Operational Machines - Petitioners engaged in manufacturing of pan masala challenge the order regarding cess computation under the Cess Act and contend that machines installed after 20.03.2026 should not be included in the computation of cess liability for the month of March as such machines were installed at the end of the month and therefore should be excluded from the total number of operational machines used for manufacturing - Whether Rule 12(4) of the Health Security Se National Security Cess Rules, 2026 requires inclusion of machines installed at the end of the month in the cess computation when such machines are actually operational and used in production of goods listed in Schedule-II of the Cess Act and whether the statutory exception under Section 5(7) for proportionate abatement applies to machines installed at the end of a month – HELD - The Rule 12(4) mandates that the total number of operational machines used for manufacturing goods listed in Schedule-II must be treated as the maximum number of installed machines for Cess computation in a given month - When machines are installed towards the end of the month and are actively used to produce or package goods in pouches or containers they must be included in the cess calculation. The sole statutory exception to cess liability under Section 5(7) provides for proportionate abatement only if a machine remains inoperative for a continuous period of 15 days or more. The meaning of the word inoperative cannot be extended to operational machines installed at the end of the month nor can it be extended to newly registered taxable persons who install machines at any time during the month - The word inoperative applies only to machines that have remained in such status for a period of 15 days or more after installation before becoming operational and not to machines installed later in the month and made operational. Rule 12(4) does not violate the enabling provisions of the Cess Act nor does it convey manifest arbitrariness or unreasonableness. The statutory scheme charges cess on production based on installed and operational machines in a given month and the petitioners have misread the provisions - The writ petition is dismissed
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