Suo motu abatement for continuous factory closure under Rule 10 is permissible without prior sanction when statutory conditions are met.

Where an assessee under the Pan Masala Packing Machine (Capacity Determination & Collection of Duty) Rules, 2008 satisfies the statutory conditions for abatement due to continuous closure of the factory for 15 days or more, suo motu adjustment of the abatement amount under Rule 10 is permissible. Prior sanction of the jurisdictional authority is not required before making the adjustment, and the Revenue cannot recover the amount so adjusted. The abatement claim is independent of annual capacity determination under the capacity rules.

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Issues: Whether an assessee governed by the Pan Masala Packing Machine (Capacity Determination & Collection of Duty) Rules, 2008 could take suo motu abatement under Rule 10 for a continuous closure of 15 days or more, and whether the demand raised by the Revenue could be sustained.

Analysis: The dispute turned on whether abatement of duty for the closure period, once the statutory conditions were satisfied, required prior sanction of the jurisdictional authority before the assessee could adjust the amount while paying duty for a subsequent month. The Tribunal found that the issue was already covered by its earlier decision holding that where factory closure for the requisite period is admitted, the assessee may adjust the abatement amount under Rule 10 and the Revenue cannot insist on recovery of the sum so adjusted. The Tribunal also accepted that the abatement claim had no relation to determination of annual capacity of production under the relevant capacity determination rules.

Conclusion: The adjustment by way of suo motu abatement was permissible, the demand and related orders were unsustainable, and the appeals were allowed in favour of the assessees.

Ratio Decidendi: Where the statutory conditions for abatement on account of continuous closure are satisfied, the assessee is entitled to adjust the abatement amount under Rule 10 and the Revenue cannot insist on prior sanction or recover the amount so adjusted.

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