Annual capacity refixation after machinery change must follow Rule 4(2), and provisional capacity orders remain appealable.

Where annual capacity of a hot re-rolling steel mill is refixed after permission to change machinery and declaration of revised technical parameters, the applicable method is Rule 4(2) of the Hot Re-rolling Steel Mills Annual Capacity Determination Rules, 1997, not Rule 5 based on the previous year's production. The Tribunal treated the earlier coordinate bench view in Awadh Alloys as binding and held that a departmental letter could not override that judicial interpretation. It also noted that an order under Section 3A(2) of the Central Excise Act remains appealable even if described as provisional. The matter was therefore remanded for fresh consideration under the correct legal position.

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Issues: (i) Whether, after permission to change machinery and declaration of revised parameters, annual capacity had to be determined under Rule 4(2) of the Hot Re-rolling Steel Mills Annual Capacity Determination Rules 1997 or whether Rule 5 applied on the basis of the previous year's production. (ii) Whether the order stating that the capacity determination was provisional barred the appeal before the Tribunal.

Issue (i): Whether, after permission to change machinery and declaration of revised parameters, annual capacity had to be determined under Rule 4(2) of the Hot Re-rolling Steel Mills Annual Capacity Determination Rules 1997 or whether Rule 5 applied on the basis of the previous year's production.

Analysis: The capacity had been re-fixed after the assessee obtained permission to alter the machinery and declared the new parameters. The earlier Tribunal decision in Awadh Alloys was treated as covering the controversy and held that, where capacity is re-determined on the basis of changed parameters under Clause 4(2) of Notification No. 32/97-CE, Rule 5 does not apply and the previous year's actual production is not to be used. The Board's letter relied upon by the department was held not to override that binding judicial view, and judicial discipline required following the coordinate bench decision.

Conclusion: Rule 5 was not applicable, and the revised capacity had to be reconsidered on the basis of the changed parameters under Rule 4(2).

Issue (ii): Whether the order stating that the capacity determination was provisional barred the appeal before the Tribunal.

Analysis: The Tribunal relied on its earlier view in Ranjeev Alloys that a determination under Section 3A(2) of the Central Excise Act, 1944 does not lose its appealable character merely because it is described as provisional. On that basis, the Tribunal held that there was no bar to entertaining the appeal.

Conclusion: The appeal was maintainable despite the provisional description of the order.

Final Conclusion: The impugned order was set aside and the matter was remanded for fresh consideration after giving the assessee an opportunity of hearing, with directions to apply the correct legal position on capacity determination and the appealability of the order.

Ratio Decidendi: Where annual capacity is refixed after a declared change in technical parameters, the determination must follow Rule 4(2) and not Rule 5 on prior-year production, and an order under Section 3A(2) remains appealable even if described as provisional.

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