Revised production capacity must govern duty liability after machinery changes reduce furnace output; past figures cannot control.

Where installed machinery and furnace parameters are changed, and the actual production capacity is demonstrably reduced, annual capacity and corresponding duty liability must be redetermined on the revised capacity. The earlier year's production figures cannot continue to govern once the physical parameters of the mill have altered, because past figures are not conclusive in the face of a proven change in capacity. The tribunal held that the revised capacity, made effective from the date of change, was the proper basis for duty computation, and continuation of the higher earlier figure was unsustainable. The order was set aside and relief followed in favour of the assessee.

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Issues: Whether, after change in the installed machinery and reduction in the furnace parameter, the annual capacity of production and the duty liability could be re-fixed on the revised capacity instead of being continued on the basis of the earlier production figures.

Analysis: The capacity had been re-fixed pursuant to the earlier remand and the revised parameter was made effective from the date of change. The dispute turned on whether the earlier annual production of 1996-97 could still govern duty liability even though the installed machinery and capacity had admittedly changed. The applicable rules did not bar redetermination where the actual capacity had fallen, and the earlier production figure could not be treated as conclusive once the physical parameters of the mill had been altered.

Conclusion: The duty liability had to be redetermined on the basis of the revised annual capacity of production, and continuation of the higher figure based on the earlier year was unsustainable. The finding was in favour of the assessee.

Final Conclusion: The impugned order was set aside and the appeal was allowed with consequential relief.

Ratio Decidendi: Where the installed machinery or material furnace parameters are changed and the capacity of production is demonstrably reduced, the annual capacity and related duty liability must be redetermined on the revised capacity rather than continued on the basis of past production figures.

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