Abatement for non-production of notified goods applies even if the factory keeps making other products.

Abatement of duty under Section 3A(3) read with Rule 96ZO(2) is available when notified goods are not produced for a continuous period of at least seven days, even if the factory continues manufacturing non-notified goods. The provision is directed to non-production of the notified goods, not closure of the entire premises, and the rule's procedural conditions on intimation, meter readings, stock position and restart do not narrow that statutory benefit. A mixed factory is therefore not excluded from abatement merely because other manufacturing activity continues.

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Issues: Whether abatement of duty under Section 3A(3) of the Central Excise Act, 1944 read with Rule 96ZO(2) of the Central Excise Rules, 1944 is available only when the entire factory is closed, or whether it is sufficient that the notified goods are not produced for a continuous period of not less than seven days even though the factory continues to manufacture non-notified goods.

Analysis: The proviso to Section 3A(3) permits proportionate abatement where a factory producing notified goods does not produce those goods during a continuous period of not less than seven days, subject to prescribed conditions. The Rule prescribes intimation of closure, meter readings, stock position, and restart of production. The decisive question is whether the statutory reference to non-production of notified goods can be equated with closure of the entire factory. The reasoning adopted is that the proviso speaks of non-production of notified goods and not of closure of the whole factory, and that non-production may occur even while other non-notified goods continue to be manufactured. A mixed factory producing both notified and non-notified goods is not excluded from the benefit merely because the factory premises remain operational for other manufacturing activity. The conditions in Rule 96ZO(2) cannot be read so as to narrow the scope of the proviso beyond its text.

Conclusion: Abatement cannot be denied merely because the entire factory was not closed; the assessee was entitled to abatement for the period during which the notified goods were not produced.

Final Conclusion: The appeal succeeded, the denial of abatement was set aside, and the assessee obtained consequential relief.

Ratio Decidendi: Where the governing provision allows abatement on non-production of notified goods for the prescribed continuous period, the benefit cannot be made conditional upon closure of the entire factory unless the statute or valid rules expressly so require.

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