Ultra vires compound levy rules defeated duty demand, and procedural abatement requirements could not revive the invalid levy.

Duty demand raised solely under Rule 96ZQ for the period when the hot air stenter was closed and sealed could not be sustained after the governing rules had been struck down as ultra vires. The Tribunal followed earlier decisions and the High Court's ruling, and rejected the lower appellate authority's contrary view. Procedural non-compliance with the abatement process, including the argument that duty had to be paid first and abatement claimed later, did not revive an invalid demand. The duty demand and penalty were therefore set aside and the assessee obtained relief.

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Issues: Whether the duty demand and penalty raised under Rule 96ZQ could be sustained for the period of closure of the hot air stenter, in view of the applicable rules having been struck down as ultra vires and the assessee's claim to abatement.

Analysis: The demand arose under the compound levy scheme for a period when the hot air stenter was stated to have remained closed and sealed by the department. The Tribunal noted that the issue had already been decided in earlier decisions following the High Court's ruling that the relevant rules were ultra vires. It was also noticed that the lower appellate authority had not given effect to that binding position and had proceeded on the basis of a contrary view. In the circumstances, the demand could not be sustained merely on the ground of a procedural requirement to pay first and seek abatement later.

Conclusion: The demand of duty was held to be unsustainable and the appeal was allowed.

Final Conclusion: The impugned order was set aside and the assessee obtained complete relief against the duty demand.

Ratio Decidendi: Where the governing rule has been held ultra vires, a duty demand raised solely under that rule cannot be sustained, and procedural non-compliance relating to abatement does not revive the invalid demand.

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