On compilation it points to the last line (.addr rd 02h) saying "symbol already defined"- ..arg?00031C6E rd 02h.

If I change cacheMX's last parameter .addr to a different name it compiles fine.

I was under impression that symbol starting with . are local and should not interfere with each other. What is wrong?

Hi.
Look at "proc" macro definition. It's simply not correct to use "pointed" labels as procedure parameters, but only as local variables

Yeah, playing with macro may cause things that look illogical but it will become clear why did it happen when look closer at what preprocessor feeds into parser. In the proc macro you have the following lines:

So for each argument macro generates some name like ..arg?000008BD, which will be available globally, but won't break the locals. Then it declares the virtual variable of that name, and then declares the symbolic constant of the name given by you to be equal to that generated name (for example addr equ ..arg?000008BD). I've made it this way to allow you to use names for arguments not beginning with dot, while still being allowed to define local variables and labels for the proc.
Symbolic constant is declared for the rest of the source (unless it is redefined or cleared with restore directive), so in the next proc your .addr symbol is just replaced with the global name (beginning with two dots) that was already used as a label - that is where the error comes from.

So what should I do?

It depends on what do you want to do.

Should I follow JohnFound's code?

Well, it was intended to be used just in that way.