Compounded levy abatement depends on timely closure intimation and seven-day continuous shutdown; relief was partly allowed.

Abatement under the compounded levy scheme was available only if closure intimation was given to the Assistant/Deputy Commissioner, with a copy to the Superintendent, on or before the date of closure, and the factory remained closed continuously for at least seven days. The claim was denied for the closure commencing on 6-5-1998 because the Superintendent was not intimated on the closure date, so the period fell short of seven days. Relief was accepted for later closure periods where timely or otherwise effective intimation was established, including cases treated as effective from the date of closure or from the date the statutory intimation was actually sent. Abatement was therefore partly allowed and partly denied.

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Issues: Whether the appellants were entitled to abatement of duty under Rule 96ZO(2) of the Central Excise Rules, 1944 read with Section 3A of the Central Excise Act, 1944 where intimation of closure was given to the departmental offices on different dates, and whether the factory had remained closed for the requisite continuous period of not less than seven days in each disputed period.

Analysis: The right to abatement under the compounded levy scheme depended on compliance with the prescribed condition of intimation to the Assistant/Deputy Commissioner with a copy to the Superintendent either prior to the date of closure or on the date of closure, and on a continuous closure of not less than seven days. For the closure commencing on 6-5-1998, intimation to the Superintendent was not given on the date of closure, so the closure period was held to be only six days and abatement was denied. For the closure commencing on 16-5-1998, the offices were closed for holidays and the intimation sent on the next working day was treated as effective from the date of closure, making the closure period sufficient. For the closure commencing on 7-8-1998, the intimation sent to the Assistant Commissioner on 8-8-1998 was accepted as the relevant date, and abatement was allowed from that date. For the closure commencing on 20-8-1998, the statutory intimation to the Assistant Commissioner was sent only on 21-8-1998, so abatement was allowed only from 21-8-1998. For the closure commencing on 1-10-1998, the absence of timely intimation on the claimed date prevented relief for the earlier period, but the record supported abatement from 5-10-1998 onwards. For the closure commencing on 26-2-1999, the intimation to the Range Office was received on the same day and the intimation to the divisional office was treated as having been sent, so the benefit of doubt was extended to the assessee.

Conclusion: The claim for abatement was partly allowed. Relief was denied for the first period beginning 6-5-1998, but was granted for the later closure periods to the extent found to satisfy the statutory conditions.

Final Conclusion: The appeal was disposed of by granting abatement for the closure periods where the statutory intimation requirement and the minimum continuous closure period were held to be satisfied, and by denying it where those conditions were not met.

Ratio Decidendi: Under Rule 96ZO(2), abatement is available only when the prescribed intimation of closure is given within the stipulated time and the factory remains closed continuously for at least seven days.

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