Compounded levy capacity determination upheld where the revised 'i' factor was supported by inspection and no machinery change was shown.

The compounded levy scheme dispute concerned whether an enhanced 'i' factor from an NISST inspection could govern annual production capacity from 1-5-98. The Tribunal held that the inspection and verification report supported the revised 'i' factor, and the assessees had not objected to the panchnama or expert verification when made. It also found no evidence of any change in the electric motor, gear box, pulley system, or their combination, which was necessary to justify altering the 'i' factor. The Commissioner's finalisation of capacity and duty liability on that basis was upheld.

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Issues: Whether the enhanced 'i' factor determined by the NISST inspection team could be applied from 1-5-98 for finalising the annual capacity of production, and whether the Commissioner's order fixing duty liability on that basis was sustainable.

Analysis: The dispute centered on the validity and effective date of application of the 'i' factor used for determining annual capacity under the compounded levy scheme. The appellants did not seriously dispute the method of verification or the expert report itself before the Tribunal, but contended that the inspection dated 16-11-99 could operate only prospectively. The Tribunal noted that the cited precedents dealt with determination of 'd' factor and not with challenge to 'i' factor. It further found that the verification report had been furnished to the appellants, that they did not object to the panchnama or the expert verification at the relevant time, and that there was no evidence of any change in the electric motor, gear box, pulley system, or combination thereof, which alone could justify alteration of the 'i' factor.

Conclusion: The 'i' factor was rightly applied from 1-5-98, and the Commissioner correctly finalised the capacity and duty liability on that basis.

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