Advance duty on stenter closure not required where shutdown exceeds one month under Rule 96ZQ(g)

Where a stenter remained closed for more than one month, Rule 96ZQ(g) of the Central Excise Rules, 1944 applied and the assessee was not required to pay duty in advance for the closure period. Rule 96ZQ(f) was confined to closures of less than one month and therefore did not govern the case. The Tribunal followed its earlier view that extended closure attracts relief from advance deposit of duty, and held that the authorities had applied the wrong rule on the admitted facts of closure for more than 36 days.

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Issues: Whether, on closure of the stenter for more than one month, the assessee was required to pay duty in advance under Rule 96ZQ(f) of the Central Excise Rules, 1944, or whether Rule 96ZQ(g) applied so as to exempt advance deposit of duty.

Analysis: The closure of the stenter for more than 36 days was not disputed. Rule 96ZQ(f) applies where closure is for less than one month and requires advance payment of duty, whereas Rule 96ZQ(g) governs closures of one month or more and provides relief from advance deposit. The Tribunal followed its earlier decisions holding that where the stenter remains closed for more than one month, the assessee is not required to deposit duty in advance for that period. On the facts found, the authorities had applied the wrong rule and the claim for relief was sustainable.

Conclusion: Rule 96ZQ(g) applied, the assessee was not liable to pay duty in advance for the period of closure, and the challenge to the order succeeded in favour of the assessee.

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