Abatement on factory closure barred differential duty and penalty where prior duty deposit was not a condition precedent.

Where abatement on closure of the factory was allowed for the relevant period, differential duty could not be demanded merely because duty had not been deposited in advance, since Rule 96ZP(2) did not make prior deposit a condition precedent for abatement. On that basis, the demand for differential duty for the abated period was unsustainable. The consequential penalty for non-discharge of the duty liability was also unsustainable and was set aside along with the duty demand.

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Issues: Whether differential duty and penalty could be sustained when the claim for abatement on closure of the factory had been allowed and the rule governing abatement did not make prior deposit of duty a condition precedent.

Analysis: The Court relied on its earlier decision holding that Rule 96ZP(2) did not impose deposit of duty as a pre-condition for claiming abatement. Since the appellant had been allowed abatement for the relevant period, the demand for differential duty for that period had no justification. For the same reason, the penalty imposed for non-discharge of the duty liability was also unsustainable.

Conclusion: The demand of differential duty and the penalty were set aside in favour of the appellant.

Ratio Decidendi: Where abatement is allowed for the relevant period, differential duty and consequential penalty cannot be sustained merely because duty was not deposited in advance, if the governing rule does not make such deposit a condition precedent for abatement.

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