XMLin('$ARGV[0]/system.xml')

That should work just fine if you use double quotes instead of single quotes.  (Single quotes don't interpolate...)

As for passing a file handle, you can say

my $parser = XML::Simple->new();
my $data = $parser->XMLin($fh);
# or
my $data = $parser->XMLin(\*FH);
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where $fh is a lexical file handle (i.e. open my $fh, ...), or an IO::File file handle, and \*FH is a ref to an old-style glob file handle.