Excise duty liability ends after permanent closure; unsurrendered licence is only a procedural lapse where no manufacture continues.

Where manufacture of excisable goods had permanently ceased and the closure was communicated to the excise authorities, duty liability under the simplified procedure did not continue merely because the licence was not formally surrendered. The non-surrender of the licence was treated as a procedural irregularity, not a substantive basis to keep duty alive in the absence of further manufacture. The authorities' inconsistent withdrawal of demands for later months on the same facts also supported this position. The duty demand for the post-closure period was therefore unsustainable.

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Issues: Whether excise duty liability continued to be payable where manufacture had permanently ceased from a specified date and the licence had not been surrendered for cancellation.

Analysis: The appellants had completely stopped manufacturing the excisable goods and had informed the excise authorities of the closure. The non-surrender of the licence was treated as a procedural lapse only. Since no excisable goods were manufactured after the closure date, the liability to pay duty under the simplified procedure could not survive merely because the licence had not been formally surrendered. The inconsistent stand of the authorities, who withdrew duty demands for some later months on the same facts, also supported the appellants' case.

Conclusion: The duty demand for the period after permanent closure was not sustainable and the issue was decided in favour of the assessee.

Final Conclusion: The orders confirming the duty demand were set aside and the appeals were accepted with consequential relief.

Ratio Decidendi: Where manufacture has permanently ceased and the excise authorities have been informed, failure to surrender the licence is only a procedural irregularity and does not by itself keep the duty liability alive in the absence of further manufacture.

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