Pro-rata abatement under compounded levy rules allowed when one furnace closed during the relevant period.

Rule 96ZO(3) of the Central Excise Rules, 1944 was applied to determine whether pro-rata abatement was available when one of two furnaces in the factory remained closed during the relevant period. The Tribunal followed its earlier decision on the same assessee and the jurisdictional High Court's prima facie view that pro-rata computation was permissible where furnace capacity changed. On that basis, the rejection of abatement was found unjustified, and the assessee was held entitled to proportionate abatement for the disputed period.

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Issues: Whether the assessee was entitled to pro-rata abatement under Rule 96ZO(3) of the Central Excise Rules, 1944 when one of the two furnaces in the factory remained closed during the relevant period.

Analysis: The dispute turned on the effect of Rule 96ZO(3), which permits payment on a pro-rata basis where the furnace capacity is more or less than the prescribed capacity or where there is any change in total capacity. The Tribunal noted that the same issue had already been considered in earlier proceedings concerning the assessee and that the jurisdictional High Court had indicated that pro-rata calculation was prima facie permissible. Following that view and the earlier Tribunal decision on the same question, the rejection of abatement was held to be unjustified.

Conclusion: The assessee was held entitled to abatement on a pro-rata basis for the period from 20.4.1998 to 13.7.1998, and the disallowance of the claim was set aside in favour of the assessee.

Ratio Decidendi: Where the compounded levy rules provide for pro-rata payment on change in furnace capacity, closure of one of multiple furnaces can justify proportionate abatement of duty.

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