Compounded levy under Rule 96ZO(3): no abatement for closure and demand sustains without Section 11A notice.

Rule 96ZO(3) under the compounded levy scheme does not provide abatement of duty for closure of a unit for not less than seven days, unlike the earlier sub-rule that expressly allowed such relief. The settled position, reflected in the cited Supreme Court authority, is that no abatement is available to units governed by Rule 96ZO(3); the claim was therefore rejected. A further challenge based on absence of notice under Section 11A of the Central Excise Act was not accepted because recovery under the compounded levy scheme proceeds on its own statutory footing; the demand was upheld in favour of the Revenue.

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Issues: Whether a unit operating under Rule 96ZO(3) was entitled to abatement of duty for closure of the unit for not less than seven days, and whether the impugned demand could be resisted on the ground that no notice under Section 11A of the Central Excise Act had been issued.

Analysis: Rule 96ZO(3) provides for payment of a fixed amount by units covered by the compounded levy scheme and contains no provision granting abatement on account of closure. The rule is framed with a non obstante clause and operates differently from the earlier sub-rule, which expressly provided for abatement in cases of closure. The settled position reflected in the cited Supreme Court authority is that no abatement is available to a unit functioning under Rule 96ZO(3). The notice-related contention was not accepted in view of the nature of recovery under the compounded levy scheme.

Conclusion: The claim for abatement was rejected and the demand was upheld in favour of the Revenue.

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