Pro-rata duty relief under Rule 96ZP(3) requires a change in installed capacity, not merely nil production from breakdown.

Under the third proviso to Rule 96ZP(3) of the Central Excise Rules, 1944, pro-rata duty relief is available only when the total installed re-rolling capacity changes. A mere stoppage of production, even where output falls to nil because of a breakdown, does not amount to a change in installed capacity if the mill's capacity parameters remain unchanged. On the stated facts, the factory's installed capacity continued unchanged despite temporary closure, so the assessee could not claim pro-rata reduction of duty on the basis of nil production.

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Issues: Whether, under the third proviso to Rule 96ZP(3) of the Central Excise Rules, 1944, an assessee is entitled to pay duty on a pro-rata basis when production falls to nil because of a breakdown, without any change in the installed re-rolling capacity.

Analysis: The third proviso to Rule 96ZP(3) applies where there is a change in the total re-rolling capacity installed in the factory. The material on record showed no alteration in the installed capacity or in the parameters affecting capacity; only production had stopped because of the breakdown. A fall in production, even to zero, is not the same as a change in installed capacity. The capacity of the mill remained unchanged notwithstanding the temporary closure.

Conclusion: The assessee was not entitled to pro-rata reduction of duty on the ground of breakdown and nil production.

Final Conclusion: The appeal failed because the statutory basis for pro-rata adjustment was absent, as the installed re-rolling capacity had not changed.

Ratio Decidendi: Pro-rata duty relief under the proviso is available only upon a change in installed capacity, not merely upon cessation or reduction of production.

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