Abatement for partial-month closure under pan masala duty rules is available where production stopped continuously during the relevant period.

Rule 10 of the Pan Masala Packing Machine (Capacity Determination and Collection of Duty) Rules, 2008 permits abatement for non-production during a continuous period of closure, and that entitlement is not confined to a full calendar month. Rule 7 only sets out monthly duty computation, while Rule 9 fixes monthly payment timing; neither provision excludes abatement for a fraction of a month. The 15-day continuous closure requirement relates to the assessee's obligation to intimate closure of machines, not to limit the substantive right to abatement. On that basis, abatement was available for the first five days of April 2011, and the revenue challenge failed.

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Issues: Whether abatement of duty under Rule 10 of the Pan Masala Packing Machine (Capacity Determination and Collection of Duty) Rules, 2008 can be granted for a period falling partly within a month, notwithstanding that duty is computed and paid on a monthly basis under Rules 7 and 9.

Analysis: Rule 7 only provides for calculation of duty for a particular month and Rule 9 prescribes payment of monthly duty by the 5th day of the same month. Neither rule indicates that abatement is unavailable for a fraction of a month. Rule 10, which governs abatement on account of non-production, speaks of a continuous period of closure and does not confine that period to a full calendar month. The requirement of a continuous period of 15 days or more is relevant to the assessee's obligation to intimate closure of machines and cannot be read to restrict the substantive right to abatement where the factory remained closed and there was no production during the relevant period.

Conclusion: The assessee was entitled to abatement for the first five days of April 2011, and the revenue's challenge failed.

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