Abatement from excise duty during factory closure applies when registration is surrendered and no goods are manufactured.

A closed factory with a surrendered registration certificate is treated as entitled to abatement from excise duty for the period of closure under Section 3A(2) of the Central Excise Act, 1944, where no excisable goods were manufactured during that time. The text distinguishes disputes over capacity determination under Section 3A(4) from claims for relief during closure, stating that precedent on production capacity does not defeat abatement under the proviso to Section 3A(2). The stated effect is that duty is not payable for the closure period.

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Issues: Whether excise duty remained payable under Section 3A of the Central Excise Act, 1944 for the period after closure of the factory and surrender of the registration certificate, and whether the assessee was entitled to abatement for the period of closure.

Analysis: The factory was found to have remained closed during the relevant period, the registration certificate had been surrendered, and there was no dispute that no excisable goods were manufactured during that time. The Tribunal noted that the earlier decision relied on by the Revenue dealt with determination of production capacity under Rule 96ZP(3) read with Section 3A(4), whereas the present controversy concerned the proviso to Section 3A(2). Following its earlier view that abatement from duty is available for the period of closure, the Tribunal held that the Revenue's reliance on the cited precedent did not defeat the claim for relief.

Conclusion: The assessee was entitled to abatement for the period of closure and no duty was payable for that period. The appeal was allowed.

Ratio Decidendi: Where a factory is closed and the registration certificate is surrendered, abatement from duty is available under Section 3A(2) of the Central Excise Act, 1944 for the period of closure, and liability cannot be sustained on the basis of capacity determination under Section 3A(4).

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