Production-capacity levy does not survive after permanent factory closure and surrender of excise registration, Tribunal notes.

Under the production-capacity based excise levy, duty liability did not survive for a period after the factory had permanently closed and the excise registration certificate had been surrendered. The demand related to a later period when the unit was no longer functioning, and the Tribunal followed its prior view that no duty can be fastened once operations have ceased and registration has been surrendered. On that reasoning, the duty demand was held unsustainable and the Revenue's appeal failed.

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Issues: Whether duty payable under Section 11A of the Central Excise Act, 1944 read with Rule 96ZP(3) of the Central Excise Rules, 1944 survived after the factory was permanently closed and the Central Excise registration certificate was surrendered.

Analysis: The duty demand related to a period after the unit had been permanently closed and the registration certificate had been surrendered. A prior Tribunal decision on the same scheme held that, in such circumstances, the liability under the production-capacity based levy does not continue once the unit has ceased operations and the registration has been surrendered. Applying that reasoning, no duty could be fastened for the later period when the factory was not functioning and the registration had already been surrendered.

Conclusion: The demand was not sustainable and the appeal by the Revenue failed.

Ratio Decidendi: Under the production-capacity based levy, duty liability does not continue for a period after permanent closure of the factory and surrender of the excise registration certificate.

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