Retrospective enhancement of declared capacity factor under compounded levy scheme rejected where verification occurred after withdrawal.

Under the compounded levy scheme for notified re-rolled iron and steel products, the department could not enhance the assessee's declared 'd' factor for a closed period on the basis of a verification conducted only after the scheme had been withdrawn. The record showed the verification was done after denotification, while the assessee had produced material regarding purchase and alteration of the pinion gear during the relevant period. In the absence of any established statutory duty to report changes in the 'd' factor after withdrawal of the scheme, the later verification was not a valid basis for revising the parameter retrospectively. The demand for differential duty for 19-1-2000 to 31-3-2000 therefore failed.

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Issues: Whether the assessee's declared "d" factor for assessment under the compounded levy scheme could be enhanced on the basis of a verification conducted after the scheme had been withdrawn, and whether differential duty could be demanded for the period 19-1-2000 to 31-3-2000.

Analysis: The dispute arose under the capacity based assessment scheme applicable to notified re-rolled products of iron and steel. The verification relied upon by the department was conducted on 6-12-2000, after the scheme had already been denotified with effect from 1-4-2000. The order notes that the assessee had produced documentary material showing purchase and alteration of the pinion gear in June and July 2000, and that no basis was shown for treating the later verification as decisive for the earlier period. Since no statutory obligation was established requiring the assessee to report changes in the "d" factor after withdrawal of the scheme, the enhancement of the parameter for the closed period was found unjustified.

Conclusion: The enhancement of the "d" factor from 158 mm to 197 mm for the period 19-1-2000 to 31-3-2000 was not sustainable, and the demand founded on that enhancement failed.

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