Abatement on furnace closure upheld where composition duty payment and verified D.G. set meter readings satisfied the rules.

A manufacturer paying duty under Rule 96ZO(3) was held not disqualified from claiming abatement under Section 3A(3) on closure of the furnace, because the amended scheme and departmental circular did not exclude that relief where the prescribed closure conditions were met. The meter-reading condition under Rule 96ZO(2)(b) and Rule 96ZO(2)(d) was also satisfied by readings taken from a duly inspected, verified and sealed meter on a D.G. set, since the rules did not require a State Electricity Board meter. The denial of abatement was therefore unsustainable, and duty relief on closure was allowed.

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Issues: (i) Whether a manufacturer opting to pay duty under Rule 96ZO(3) of the Central Excise Rules, 1944 is still eligible for abatement under Section 3A(3) of the Central Excise Act, 1944 on closure of the factory. (ii) Whether the statutory requirement to intimate electricity meter readings under Rule 96ZO(2)(b) and Rule 96ZO(2)(d) is satisfied when the readings are taken from a meter installed on a D.G. set instead of a meter installed by the State Electricity Board.

Issue (i): Whether a manufacturer opting to pay duty under Rule 96ZO(3) of the Central Excise Rules, 1944 is still eligible for abatement under Section 3A(3) of the Central Excise Act, 1944 on closure of the factory.

Analysis: The amended text of Rule 96ZO(3), read with the departmental circular explaining the 30-8-1997 changes, did not exclude the benefit of abatement under Section 3A(3) where the factory remained closed for the prescribed period. The adjudicating authority had itself accepted that abatement claims were admissible if the conditions of Rule 96ZO(2) were fulfilled. The revenue could not successfully contend that the composition mode under Rule 96ZO(3) by itself barred abatement, particularly when the amended scheme and the circular recognized abatement for closed induction furnace units.

Conclusion: The assessee was not disqualified from claiming abatement merely because duty was paid under Rule 96ZO(3).

Issue (ii): Whether the statutory requirement to intimate electricity meter readings under Rule 96ZO(2)(b) and Rule 96ZO(2)(d) is satisfied when the readings are taken from a meter installed on a D.G. set instead of a meter installed by the State Electricity Board.

Analysis: The language of clauses (b) and (d) required intimation of the electricity meter reading at closure and restart, but did not restrict the meter to one installed by the State Electricity Board. A meter on a D.G. set was also capable of satisfying the requirement if its reading was duly intimated and verified. On the facts, the meter on the D.G. set had been inspected, verified and sealed, and the departmental officers had recorded the readings and stock position at the relevant times. No material was shown to discredit the readings or establish non-compliance with the prescribed conditions.

Conclusion: The assessees complied with Rule 96ZO(2)(b) and Rule 96ZO(2)(d), and the abatement claim could not be denied on the ground that the meter was not installed by the State Electricity Board.

Final Conclusion: The denial of abatement was unsustainable, and the assessee was entitled to the duty relief claimed on closure of the furnace.

Ratio Decidendi: Where the statutory scheme and binding departmental circular permit abatement on closure, the benefit cannot be denied merely because duty was paid under the composition option, and compliance with meter-reading conditions is satisfied by a duly verified meter on a D.G. set if the rules do not insist on a State Electricity Board meter.

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