Actual production-based redetermination remains available where statutory conditions are met, despite duty payment under Rule 96ZP.

The statutory scheme for compounded excise duty under Section 3A allows annual capacity to be fixed, but also permits redetermination where actual production is lower than that capacity. Duty already paid may then be adjusted under the same framework. Payment under Rule 96ZP(1) does not, by itself, exclude recourse to actual-production based redetermination when the statutory conditions in Section 3A(4) are met. The matter therefore turns on the availability of the statutory remedy for reassessment on actual production rather than on the original capacity-based fixation.

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Issues: Whether a manufacturer paying duty under Rule 96ZP(1) of the Central Excise Rules, 1944 can claim determination of duty on actual production under Section 3A(4) of the Central Excise Act, 1944 when the actual production is lower than the annual capacity of production fixed by the proper officer.

Analysis: The Tribunal held that the scheme of Section 3A of the Central Excise Act, 1944 contemplates fixation of annual capacity under sub-section (2), but also expressly permits an assessee to seek redetermination where actual production is lower under sub-section (4). Sub-section (5) further provides for adjustment of duty already paid after such redetermination. On that basis, the Tribunal treated the option under Rule 96ZP(1) as not excluding recourse to actual production where the statutory conditions under Section 3A(4) are satisfied.

Conclusion: The assessee was entitled to claim duty on actual production under Section 3A(4), and the stay order was modified in its favour.

Final Conclusion: The matter was sent back to the original adjudicating authority for fresh decision in the light of the Tribunal's view that duty liability could be redetermined with reference to actual production where it is lower than the annual capacity fixed under the statutory scheme.

Ratio Decidendi: Where the statutory scheme expressly provides for redetermination of duty with reference to actual production when actual production is lower than the annual capacity fixed, that remedy remains available and is not excluded merely because duty was being paid under Rule 96ZP(1).

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