Compounded levy option under a superseded scheme does not continue; duty must follow actual production after substitution.

A compounded levy declaration made under the original scheme did not remain effective after the scheme was substituted from 1 September 1997. The substituted Rule 96ZP required a fresh and valid option, and the earlier declaration was treated as tied to the superseded regime, defective in form, and not a valid election for the new provisions. Because the assessee proceeded on the basis of actual production after substitution, duty was required to be determined on actual production under the normal scheme, with adjustment of any excess payment. The demand under the compounded levy scheme was set aside and the matter remanded for recomputation accordingly.

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Issues: Whether an option purportedly given under the original compounded levy scheme remained valid after substitution of the scheme from 1 September 1997, and whether duty was payable under the compounded levy scheme or on the basis of actual production.

Analysis: The original compounded levy scheme notified on 1 August 1997 was later amended and substituted with effect from 1 September 1997. Rule 96ZP(4) required a specific option in terms of Rule 96ZP(3), but Rule 96ZP(3) itself stood substituted. The declaration relied upon by the Revenue was found to be tied to the earlier scheme, defective in form, not a fresh option under the substituted provisions, and not acted upon as a valid election for the new regime. The record also showed that the appellant had proceeded on the basis of actual production after the substituted scheme came into force.

Conclusion: The earlier declaration became redundant and stale after substitution of the scheme, and the appellant was not bound to pay duty under the compounded levy scheme. Duty was to be determined on actual production basis under the normal scheme, with consequential adjustment of excess duty, if any.

Final Conclusion: The demand under the compounded levy scheme was set aside and the matter was sent back for determination of duty in accordance with actual production and adjustment of any excess payment.

Ratio Decidendi: When a compounded levy regime is substituted and the statutory option required under the substituted rules is not freshly and validly exercised, an earlier option under the superseded regime does not continue to bind the assessee.

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