Compounded levy scheme bars abatement claims after a voluntary option, and power cuts do not justify redetermination of duty.

Rule 96ZO(3) under the compounded levy scheme allowed a manufacturer to discharge excise duty by paying a fixed lump sum, with an express bar on claiming the benefit of the proviso to Section 3A(3) or Section 3A(4) after exercising the option. The Court held that an assessee who voluntarily chose that scheme could not retain its advantages while disowning its disadvantages, so reduced utilisation from power cuts did not justify abatement or re-determination of duty. Earlier contrary observations were treated as per incuriam because they overlooked the rule's express exclusion. The challenge to Rule 96ZO(3) therefore failed.

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Issues: Whether Rule 96ZO(3) of the Central Excise Rules was liable to be struck down or read down so as to permit abatement or re-determination of duty on account of power cuts, and whether an assessee who opted for the compounded levy scheme could still claim the benefit of the proviso to Section 3A(3) or Section 3A(4) of the Central Excise Act, 1944.

Analysis: Rule 96ZO(3) created an optional compounded levy scheme under which the assessee could choose to pay a fixed lump sum in full and final discharge of duty liability. The scheme expressly stated that once the option was exercised, the manufacturer would not avail the benefit under the proviso to Section 3A(3) or under Section 3A(4). The Court held that a taxpayer who voluntarily elected the scheme could not accept its advantages while rejecting its disadvantages. The plea based on power cuts and consequential reduction in utilisation capacity was therefore incompatible with the statutory choice made under the rule. The contrary observations in an earlier decision were treated as per incuriam insofar as they overlooked the express exclusion in Rule 96ZO(3).

Conclusion: The challenge to Rule 96ZO(3) failed, and the assessee was not entitled to abatement or re-fixation of duty under Section 3A after opting for the compounded levy scheme.

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