Pro rata duty abatement upheld for partial-month factory operations under the monthly duty scheme.

Under the Pan Masala Packing Machines Rules, where a factory remains closed or resumes operations only for part of a month, duty may be computed on a pro rata basis for the actual operating days if the statutory conditions for closure and recommencement are satisfied. The Tribunal applied the monthly duty scheme with the abatement provisions in Rule 9 and followed prior precedent to hold that non-payment of full monthly duty upfront does not by itself defeat proportionate abatement. On that basis, the demand for differential duty, interest and penalties was found unsustainable and the impugned order was set aside.

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Issues: Whether, for the month in which the factory resumed operations only for part of the month, the assessee was required to pay duty for the entire month or could discharge duty on a pro rata basis for the actual operating days and claim abatement for the remaining period.

Analysis: The monthly duty scheme under the Pan Masala Packing Machines Rules was read together with the abatement mechanism in the proviso to Rule 9 and the allied provisions governing closure and recommencement. The assessee had intimated closure and subsequent resumption, and the unit operated only for a part of the month. The Tribunal followed its earlier decision and the Delhi High Court ruling that non-payment of full monthly duty upfront does not defeat entitlement to proportionate abatement where the statutory conditions for closure or recommencement are satisfied. The demand was also considered inconsistent with the statutory scheme and the assessee's claim to pro rata computation for the actual working period.

Conclusion: The assessee was entitled to pro rata duty computation for the period of actual operations, and the demand for differential duty, interest, and penalties was unsustainable.

Final Conclusion: The impugned order was set aside and the appeal was allowed with consequential relief.

Ratio Decidendi: Where the statutory scheme permits proportionate abatement on closure or recommencement during a month, duty cannot be insisted upon for the full month merely because monthly duty was not deposited upfront.

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