ORDER
C.N.B. Nair, Member (J)
1. Appellants are manufacturers of MS Ingots and Billets and are paying duty on the basis of capacity of production in terms of Section 3A of the Central Excise Act. They were paying duty based on the capacity of production as determined by the Commissioner. The dispute in the present appeal is with regard to the claim of the appellants for abatement of duty in terms of Rule 967O. Appellants’ unit remained closed during different periods in September, October and November, 1997. Therefore, they claimed remission in terms of Sub-section (3) of Section 3A of the Act and Rule 96ZO. The Commissioner, however, rejected their claim on the ground that appellants would be eligible for abatement only if the factory remain closed. He has held as follows :-
“If the assessee wants to seek abatement, he has to necessarily fulfill the conditions in toto without any let-up. Even if one condition is flouted he is not eligible for the abatement. In the instant case, as indicated in paragraph supra, the assessee has flouted at least one condition in each of the closure periods. I do not subscribe to the view expressed by the assessee with regard to the closure of the factory. A reading of Sub-rules 967O(2)(b) and (e) makes it clear that the abatement is allowable only when the factory is closed. I hold that the factory is closed when no activity whatsoever takes place therein. Decline in stocks indicates that the factory has functioned but not closed. Further, as per the said rule intimation of closure/starting should be filed on the day of closure/starting or on a day prior to that date. When the position is very much clear they cannot file the intimation on any other date other than the above mentioned dates. Even if the factory is closed after office hours there are ways of intimation such as sending a telegram. Assessee has produced no such evidence before me. As such it is to be taken that they have flouted the condition of the notification in this regard. When the rule indicates that stock position should be furnished they cannot fail to do so if they want to seek abatement.”
2. Ld. Counsel for the appellants submits that the interpretation placed by the Commissioner on the provisions of Rule 96ZO is clearly erroneous. The Rule states that “where a manufacturer does not produce ingots and billets”, abatement will be permissible. He, therefore, submits that the requirement is that there should be no production of ingots and billets and not that the assessee does not carry out any transactions relating to disposal of already manufactured goods. Ld. Counsel also submits that the Commissioner was in error in interpretating the provisions relating to the intimation. He submits that the only requirement under the rule is that the intimation should be filed either prior to the day of closure or on the day of closure. In the facts of this case, appellants had filed intimation regarding closure on the date of closure itself. He, further, contends that in any event, the abatement should be provided to appellants from the date of intimation even if there was delay in intimating the closure.
3. In support of his contentions, ld. Counsel draws our attention
to the Commissioner of Customs & Central Excise, Hyderabad Public
Notice No. 26/98 dated 30-4-98 which specifically clarified that
there is no stipulation in Rule 96ZO that factory cannot undertake
the clearances from stock of goods manufactured earlier and the factory/manufacturer would be eligible to the abatement when he has not produced notified goods for a period not less than 7 days even if he had cleared the goods during this period.
4. We have heard ld. DR also.
5. We have perused the records and have considered the submissions made by both the sides. There is no dispute in the present case that appellants could avail themselves of the abatement provided, they fulfilled the conditions of Rule 96ZO. However, the first objection of the learned Commissioner is that the factory should be closed for all purposes if the abatement is to be allowed for a particular period. He has held that non-production is not sufficient. We are not able to agree with this intrepretation of the rule by the Commissioner. The requirement under the rule is that “a manufacturer does not produce ingots/billets”. This position remains clarified in the Public Notice No. 26/98 dated 30-4-98. We read the relevant paragraph.
“As per the provisions of Sub-section (3) of Section 3A, as also Sub-rule (2) Rule 96ZO and Sub-rule (2) of Rule 96ZP, abatement can be claimed when a factory does not produce the notified goods for a continuous period of not less than seven days. There is no stipulation that during this period the factory cannot undertake clearances from stocks of goods manufactured earlier. Hence, in the circumstances, the factory/manufacturer would be eligible to claim abatement when he has not produced the notified goods for a period of not less than seven days even if he has cleared goods during this period.”
6. It is clear from the above paragraph that appellants were eligible for the abatement as the fact of their having not produced the goods during the period is not disputed. With regard to the second objection taken by the Commissioner that the intimation should be filed prior to the date of closure or on the date of closure and in the event of any delay in filing the intimation the claim for abatement would not be permissible even for the periods subsequent to the intimation, we find that condition (a) of Sub-rule (2) does not contemplate denial of abatement on account of delay in filing the intimation. In the present case, appellants’ submission is that they had filed intimation on the date of closure itself.
The Rule does not contemplate denial of abatement from the date of filing of intimation regarding closure even if the closure has taken place prior to the date of intimation. Therefore, we find the Commissioner’s interpretation of condition (a) of Sub-rule also to be erroneous. In the circumstances, we hold that appellants would be eligible for exemption from the date of intimation. Accordingly, the appeal is disposed of by way of remand for the Commissioner to reconsider their claim and to allow the same for the period of closure subsequent to the date of intimation. Appellants shall be given hearing before passing of the order in remand.