Compounded levy duty liability cannot be reduced pro rata for mid-month closure unless the rule expressly allows apportionment.

Rule 96ZP(3) fixed monthly duty liability on the annual capacity of production and treated payment by the prescribed date as full and final discharge for the relevant period. Because the rule did not permit apportionment of the monthly instalment when the factory closed mid-month, the assessee could not claim pro rata reduction for that month. The proviso on proportionate annual production applied only where a factory operated for part of the year, not where closure occurred after monthly liability had accrued. Pro rata reduction was therefore unavailable.

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Issues: Whether an assessee paying duty under Rule 96ZP(3) of the Central Excise Rules, 1944 was entitled to pro rata reduction of duty for the part of the month during which the factory remained closed before surrender of registration.

Analysis: Rule 96ZP(3) required monthly payment of duty at the prescribed rate on the annual capacity of production, by the 10th of each month, and treated the amount paid as full and final discharge of duty liability for the relevant period. The rule did not provide for apportionment of the monthly instalment on a pro rata basis where the factory ceased operations mid-month. The proviso relating to proportionate calculation of annual production applied where a factory producing notified goods was in operation only during part of the year, and not to a situation where closure occurred after the monthly liability had already accrued under the rule.

Conclusion: The assessee was not entitled to pro rata reduction of the duty payable for March 2000.

Final Conclusion: Duty under the compounded levy scheme remained payable on the monthly basis prescribed by the rule, and mid-month closure did not reduce the liability for that month.

Ratio Decidendi: Where a compounded levy provision fixes monthly duty liability with full and final discharge upon payment by the prescribed date, no pro rata reduction is permissible for a closure occurring after the monthly liability has accrued unless the governing rule expressly so provides.

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