Compounded levy election continues until express opt-out; protest on duty quantum does not end liability under the scheme.

A compounded levy election under Rule 96 ZO(3) was treated as continuing from year to year and did not require a fresh annual option under Rule 96 ZO(4). A manufacturer who had entered the scheme remained bound by it unless an express opt-out was shown. Correspondence seeking re-determination of duty on the basis of actual production was only a protest against the quantum of duty and did not amount to withdrawal from the scheme. The same principle also supported the view that a taxpayer cannot retain the compounded levy benefit and shift to assessment on actual production basis under Section 3A(4) within the same cycle. The assessee remained liable to duty for 1999-2000 under Rule 96 ZO(3).

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Issues: Whether the assessee remained liable to pay duty for the financial year 1999-2000 under Rule 96 ZO(3) when no fresh annual option was filed and no express opt-out from the compounded levy scheme was shown.

Analysis: The declaration under Rule 96 ZO(4) was not framed as a year-specific election and did not require renewal every financial year. Once the assessee had opted into the compounded levy scheme under Rule 96 ZO(3), that choice continued unless the assessee expressly opted out of it. The correspondence relied upon by the assessee only showed dissatisfaction with the quantum of duty and a request for re-determination on actual production basis. Such communications did not amount to a formal exit from the scheme. The principle that a manufacturer cannot first avail the compounded levy arrangement and then switch to actual production basis under Section 3A(4) in the same cycle supported the continued applicability of the scheme until an express opt-out.

Conclusion: The assessee was liable to be assessed to duty for the year 1999-2000 under Rule 96 ZO(3), and the challenge to that liability failed.

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