2000 (8) TMI 910 - AT - Central Excise

Summary

Issues Involved:
1. Interpretation of Section 3A(3) of the Central Excise Act, 1944, and Rule 96ZO(2) of the Central Excise Rules, 1944.
2. Eligibility for abatement of duty for non-production of notified goods.
3. Definition of factory closure for the purpose of claiming abatement.

Detailed Analysis:

1. Interpretation of Section 3A(3) and Rule 96ZO(2):
The appellants argued that Section 3A(3) of the Central Excise Act allows for abatement of duty if a factory producing notified goods does not produce these goods for a continuous period of not less than seven days, provided the manufacturer meets the conditions prescribed by the rules. Rule 96ZO(2) outlines these conditions, which include informing the authorities about the closure and restarting of production, meter readings, and stock levels. The appellants contended that this rule should apply to factories exclusively producing notified goods, not those also producing non-notified goods.

2. Eligibility for Abatement of Duty:
The appellants claimed abatement for periods when they ceased production of non-alloy steel ingots and billets due to adverse market conditions, even though they continued to produce non-alloy castings. They argued that the non-production of notified goods for the specified period should suffice for claiming abatement, as the law does not require the entire factory to be closed. The Department, however, denied the abatement on the grounds that the factory continued operations, albeit for non-notified goods.

3. Definition of Factory Closure:
The Commissioner held that abatement was admissible only if the entire factory was closed. The appellants countered that the term "closure" in Rule 96ZO(2) should not be interpreted to mean the entire factory but rather the cessation of production of the notified goods. They supported their argument by referring to previous Tribunal decisions and the legal interpretation of similar provisions, suggesting that the conditions for abatement should not require the complete shutdown of all factory operations.

Judgment:
The Tribunal found merit in the appellants' arguments, noting that Section 3A(3) and its proviso do not mandate the complete closure of the factory but only the non-production of notified goods for the abatement period. The Tribunal referenced previous decisions to support the view that the rule applies specifically to the production of notified goods and not the entire factory's operations. Consequently, the Tribunal allowed the appeal, granting the appellants the claimed abatement and setting aside the impugned order.