Compounded levy duty cannot be demanded for a closed manufacturing period when closure was duly intimated and no production occurred.

Duty under the compounded levy scheme was not sustainable for a period when the manufacturing unit remained closed and had intimated the closure to the department under acknowledgement. The demand under Rule 96ZP of the Central Excise Rules, 1944 depended on the unit being engaged in production, and the appellate authority's finding that there was no manufacture during the closed period was not disturbed. On that basis, the Tribunal affirmed that no duty could be recovered for the remaining closed period, and the departmental appeal failed.

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Issues: Whether duty under the compounded levy scheme could be demanded for the period during which the manufacturing unit remained closed and its closure was intimated to the department.

Analysis: The demand was raised under Rule 96ZP of the Central Excise Rules, 1944 on the footing that duty was payable for the relevant period. The appellate authority had restricted the demand after finding that the unit had remained closed and had intimated the closure to the Range Officer under acknowledgement. The Tribunal found no valid ground to disturb that finding. In the absence of production during the closed period, the demand for the remaining period was not sustainable.

Conclusion: Duty could not be demanded for the period when the unit was closed and not engaged in manufacture; the departmental appeal fails.

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