Abatement under Rule 96ZO requires statutory compliance and verification before duty reduction; unilateral deduction is not permitted.

Abatement from duty under Rule 96ZO was not available as a unilateral self-deduction by the manufacturer; it arose only after compliance with the prescribed closure-intimation and related conditions, and verification by the competent authority. The proper officer or Commissioner had to determine whether the abatement claim was admissible before any reduction in duty liability. In the circumstances described, penalty was not warranted because the dispute turned on the admissibility of abatement and the resulting duty quantification pending scrutiny. Any short payment would arise only if the abatement claim was ultimately rejected after adjudication.

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Issues: (i) Whether an assessee governed by Rule 96ZO could itself deduct abatement from the duty payable before making payment, or whether abatement was available only after compliance with the prescribed statutory conditions and determination by the proper authority; (ii) Whether penalty was sustainable in the circumstances.

Issue (i): Whether an assessee governed by Rule 96ZO could itself deduct abatement from the duty payable before making payment, or whether abatement was available only after compliance with the prescribed statutory conditions and determination by the proper authority.

Analysis: Section 3A(3) of the Central Excise Act, 1944 provides for duty on notified goods and permits abatement on a proportionate basis where the factory does not produce the goods for a continuous period of not less than seven days, subject to prescribed conditions. Rule 96ZO(2) prescribes those conditions, including timely written intimation of closure and restarting of production, together with stock and electricity meter details. On a harmonious reading of the provision and the rule, abatement is not an automatic self-assessed deduction by the manufacturer; it is available only after the prescribed conditions are satisfied and the proper officer verifies compliance.

Conclusion: The assessee was not entitled to unilaterally curtail the duty payable by taking abatement on its own before payment. The question of admissibility of abatement had to be decided by the competent Commissioner.

Issue (ii): Whether penalty was sustainable in the circumstances.

Analysis: The dispute concerned the availability of abatement and the quantum of duty payable pending scrutiny of the abatement claims. In that setting, imposition of penalty was not warranted.

Conclusion: Penalty was not sustainable.

Final Conclusion: The abatement claims were required to be adjudicated by the Commissioner after hearing the assessee, and the assessee would be liable to pay any duty found short-paid only if abatement was not allowed. The appeal was otherwise disposed of in those terms.

Ratio Decidendi: Where a statute and rule prescribe conditions for abatement of duty, the assessee cannot claim the abatement unilaterally before payment; the benefit arises only upon compliance with the prescribed conditions and determination by the competent authority.

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