Non-production during factory closure cannot sustain duty demand where records show stoppage, despite belated intimation to the department.

Duty, interest and penalty were stated to be unsustainable for a period when factory production had already stopped, because factory records and departmental verification supported the finding of closure and non-manufacture. The delayed intimation to the department was treated as insufficient, by itself, to fasten liability for a period in which no manufacture was taking place. On that basis, the demand was set aside in favour of the assessee.

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Issues: Whether duty, interest and penalty were sustainable for the period during which the factory had stopped production, notwithstanding that intimation to the department was given belatedly.

Analysis: The factory records and the departmental verification showed that production had in fact stopped before the disputed period. The denial of relief rested mainly on the delayed intimation of stoppage, but the undisputed factual position of closure and non-production was supported by the department's own materials. In such circumstances, the absence of immediate intimation did not justify fastening duty liability for a period when no manufacture was taking place.

Conclusion: The demand of duty, interest and penalty for the disputed period was not sustainable and was set aside in favour of the assessee.

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