Retrospective trade notices cannot deny furnace closure abatement; mandatory penalty under Rule 96ZO(3)(ii) remains unreduced.

A later trade notice could not be applied retrospectively to deny abatement for an earlier furnace closure period, because administrative instructions cannot alter the legal position for a completed period; the abatement for the disputed closure days was upheld. Penalty under Rule 96ZO(3)(ii) was mandatory, and the Court applied Supreme Court guidance to hold that the authority had no discretion to reduce it on grounds of absence of mens rea or bona fide conduct; the Tribunal's reduction of penalty was unsustainable. The Revenue succeeded only on the penalty issue, while the abatement issue was decided for the assessee.

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Issues: (i) Whether a trade notice issued after the relevant period could be applied retrospectively to deny abatement for the period of closure of the furnace; (ii) Whether penalty under Rule 96ZO(3)(ii) was mandatory and whether the authority had discretion to reduce it.

Issue (i): Whether a trade notice issued after the relevant period could be applied retrospectively to deny abatement for the period of closure of the furnace?

Analysis: The closure intimation for the relevant period was sent before the later trade notice came into existence. An administrative instruction or trade notice cannot be given retrospective effect so as to alter the legal position for an earlier period. The allowance of abatement for the disputed three days was therefore not unjustified.

Conclusion: The issue was decided against the Revenue and in favour of the assessee.

Issue (ii): Whether penalty under Rule 96ZO(3)(ii) was mandatory and whether the authority had discretion to reduce it?

Analysis: The penalty provision under Rule 96ZO(3)(ii) was held to be mandatory. The Court followed the Supreme Court decisions clarifying that the rule did not incorporate a discretion to reduce penalty on grounds of absence of mens rea or alleged bona fide conduct. The reduction of penalty by the Tribunal was therefore not sustainable.

Conclusion: The issue was decided in favour of the Revenue and against the assessee; the penalty provision was mandatory and not reducible on discretionary grounds.

Final Conclusion: The appeals succeeded only to the extent of the penalty issue, while the abatement granted for the disputed closure period was upheld, resulting in a partial success for the Revenue.

Ratio Decidendi: A later trade notice cannot be applied retrospectively to an earlier period, and penalty under Rule 96ZO(3)(ii) is mandatory without discretion to reduce it on equitable grounds.

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