Compounded levy under Section 3A governs duty liability once goods are covered, excluding actual production claims.

Section 3A of the Central Excise Act, 1944 provides a compounded levy scheme that overrides the general production-based levy under Section 3. Once goods are covered by that scheme, duty is chargeable on annual capacity of production, not actual output, and an assessee cannot insist on reassessment by factors such as raw material availability, power supply, labour, or finance. The text also states that an assessee opting under Rule 96ZO(3) cannot withdraw from the scheme during the financial year, and payment made in the prescribed manner supports that position. On this basis, the challenge to duty computation on actual production failed.

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Issues: Whether an assessee covered by Section 3A of the Central Excise Act, 1944 could insist on payment of duty on the basis of actual production instead of compounded levy, and whether it could deny having opted under Rule 96ZO(3) of the Central Excise Rules, 1944.

Analysis: Section 3A operates as an alternative scheme for levy and collection of duty and, by its non obstante clause, overrides the general production-based levy under Section 3. Once goods are brought under that scheme, duty is chargeable on the basis of annual capacity of production and not actual production. The scheme had already been upheld and the judicial position recognised that an assessee opting under Rule 96ZO(3) cannot withdraw from the scheme during the financial year. The record also showed payment of duty in the manner contemplated by that sub-rule, and the notifications fixing capacity did not permit factors such as raw material availability, power supply, labour, or finance to be used for re-determining liability on actual production basis.

Conclusion: The claim to levy duty on actual production was unsustainable, and the challenge to the compounded levy scheme failed.

Final Conclusion: The appeal was held to have no legal basis because the compounded levy mechanism under Section 3A governed the duty liability once the goods were covered by that scheme.

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