Compounded levy option and ACP orders: valid declaration sustains later duty demands, but a set-aside ACP basis requires fresh recomputation.

Furnishing the declaration prescribed under Rule 96ZO(4) was treated as a valid exercise of the compounded levy option under Rule 96ZO(3), because the assessee had consistently claimed to have opted for the lump-sum scheme and could not later deny the declaration. The duty demand for periods after 1.4.1998 was sustained where the second ACP order remained undisturbed and continued to govern liability. However, the demand for 1.9.1997 to 31.3.1998, which depended on the first ACP determination, could not stand once that order had been set aside and had to be worked out afresh after reconsideration.

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Issues: (i) Whether the assessee had validly opted for the compounded levy scheme under Rule 96ZO(3) by furnishing the declaration required under Rule 96ZO(4) of the Central Excise Rules, 1944. (ii) Whether the duty demand for the period after 1.4.1998 was sustainable and whether the demand for the period 1.9.1997 to 31.3.1998 required fresh consideration in view of the earlier order setting aside the first ACP determination.

Issue (i): Whether the assessee had validly opted for the compounded levy scheme under Rule 96ZO(3) by furnishing the declaration required under Rule 96ZO(4) of the Central Excise Rules, 1944.

Analysis: The record showed that the assessee had from the outset claimed to have opted for the lump-sum scheme and had made the declaration contemplated by Rule 96ZO(4). In that factual background, the assessee could not later contend that no declaration had been filed. The option under Rule 96ZO(3) was therefore treated as having been exercised.

Conclusion: The issue was decided against the assessee and in favour of the Revenue.

Issue (ii): Whether the duty demand for the period after 1.4.1998 was sustainable and whether the demand for the period 1.9.1997 to 31.3.1998 required fresh consideration in view of the earlier order setting aside the first ACP determination.

Analysis: The first ACP order had been set aside for reconsideration, so the demand for 1.9.1997 to 31.3.1998 based on that order could not stand as such and had to be worked out afresh after a fresh ACP determination. By contrast, the second ACP order of June 1998 remained undisturbed and governed the later periods. Since the assessee had opted for the compounded levy scheme and the second ACP order subsisted, the demands for the post-1.4.1998 periods were held to be enforceable. The related abatement plea did not dislodge those demands.

Conclusion: The demand for the later periods was upheld, while the demand for 1.9.1997 to 31.3.1998 was remitted for fresh action; the issue was thus partly in favour of the assessee and partly in favour of the Revenue.

Final Conclusion: The appeal succeeded only to the limited extent of the first period, for which a fresh ACP-based exercise was directed, while the remaining duty demands were sustained.

Ratio Decidendi: Where an assessee has opted for the compounded levy scheme by the prescribed declaration, the duty liability under that scheme remains enforceable so long as the governing ACP order subsists; if the foundational ACP order is set aside, the demand based on it must be reworked, but an unchallenged ACP order continues to sustain subsequent duty demands.

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