Capacity-based excise assessment must follow the prescribed evidence hierarchy, and alternative payment schemes cannot be combined for one period.

Mandatory capacity determination under the Induction Furnace Annual Capacity Determination Rules, 1997 requires the Commissioner to follow the prescribed evidentiary hierarchy, starting with authenticated invoice material, then comparable furnaces, and only then other relevant material; a fixation made without that sequence is invalid. Where the original fixation was not made in accordance with the rule, fresh technical opinion and investigation material may justify redetermination, and functus officio will not bar further action on that basis. The article also states that the lump-sum payment mechanism under rule 96ZO(3) and assessment under section 3A(4) are alternative schemes and cannot be combined for the same period.

---

---

Issues: (i) whether the annual capacity of production was fixed in accordance with the prescribed method under the Induction Furnace Annual Capacity Determination Rules, 1997; (ii) whether the Commissioner could redetermine the earlier fixation on the basis of subsequently gathered material; (iii) whether the assessee could seek assessment under section 3A(4) of the Central Excise Act, 1944 after opting for the lump-sum payment mechanism under rule 96ZO(3) of the Central Excise Rules, 1944.

Issue (i): whether the annual capacity of production was fixed in accordance with the prescribed method under the Induction Furnace Annual Capacity Determination Rules, 1997.

Analysis: The prescribed rule required the Commissioner to ascertain furnace capacity first from the authenticated manufacturer's or trader's invoice, then from comparable furnaces, and only thereafter from any other relevant material. The fixation made earlier did not show adherence to that hierarchy and was not supported by the prescribed material. The Tribunal held that the earlier determination was not made in accordance with law.

Conclusion: The fixation of annual capacity of production was invalid and could not be sustained.

Issue (ii): whether the Commissioner could redetermine the earlier fixation on the basis of subsequently gathered material.

Analysis: Since the earlier fixation itself was not in conformity with the statutory rule, the Tribunal held that the Commissioner was not barred from redetermining the capacity when fresh material, including technical opinion and investigation results, had emerged. The plea of functus officio was rejected on the facts because the original determination was not a lawful final fixation under the rule.

Conclusion: The Commissioner could proceed to redetermine the capacity on the basis of relevant fresh material.

Issue (iii): whether the assessee could seek assessment under section 3A(4) of the Central Excise Act, 1944 after opting for the lump-sum payment mechanism under rule 96ZO(3) of the Central Excise Rules, 1944.

Analysis: The Tribunal applied the principle that the two schemes are alternative and cannot be combined as a hybrid procedure. An assessee may opt out for a subsequent period, but cannot simultaneously claim the benefit of both schemes for the same period.

Conclusion: The assessee could not claim a hybrid benefit of rule 96ZO(3) and section 3A(4) for the same period.

Final Conclusion: The impugned order was set aside and the matter was sent back for fresh fixation of capacity and consequential reconsideration in accordance with law, after supplying the relevant technical material and giving effective opportunity to the assessee.

Ratio Decidendi: Where a statutory capacity-based excise assessment is governed by a mandatory sequence of evidentiary sources, non-compliance with that sequence vitiates the fixation and permits redetermination on legally relevant fresh material, but the assessee cannot combine mutually alternative charging/payment schemes for the same period.

---