Re-determined annual capacity governs when machinery parameters change after valid intimation and verification.

Where a manufacturer validly intimates closure and modification of machinery parameters, the re-determined annual capacity of production must apply for the relevant period, and the deemed base-year capacity cannot be retained. The scheme for deemed capacity operates only where there is no change in parameters during the relevant period. On the stated facts, closure, modification and departmental verification were undisputed, so the revised capacity of 880.5 MT/annum governed the period after intimation. The contrary adoption of the base-year capacity was not justified, and duty liability was to be worked out on the basis of the re-determined capacity with consequential relief.

---

---

Issues: Whether, after intimation of closure and modification of machinery parameters, the assessee was entitled to have the revised annual capacity of production of 880.5 MT/annum applied for the relevant period, instead of the base year capacity being deemed for that period.

Analysis: The facts of intimation, closure, modification and departmental verification were not in dispute. The reduced capacity after re-determination was 880.5 MT/annum. The deemed capacity principle was held to apply where there is no change in parameters during the relevant period, whereas the scheme for re-determination of capacity governs cases where parameters are altered. Since the assessee had intimated the closure and completion of modification, there was no justification to ignore the re-determined capacity for the period after receipt of the intimation.

Conclusion: The revised annual capacity of production of 880.5 MT/annum had to be applied for the relevant period, and the contrary adoption of the base year capacity was not justified.

Final Conclusion: The appeal succeeded to the extent that duty liability for the relevant period was to be worked out on the basis of the re-determined capacity, with consequential relief according to law.

Ratio Decidendi: Where the manufacturer has validly intimated and effected a change in parameters, the re-determined annual capacity must govern the relevant period, and the deemed base-year capacity applies only in the absence of such change.

---