Retrospective application of Rule 5 barred where the Rule 3 declaration was filed before the amendment took effect.

Rule 5 of the Hot Rerolling Mills Annual Capacity Determination Rules, 1997 could not be applied retrospectively to declarations already filed under Rule 3(1) before its insertion on 1 September 1997. Where the assessee had submitted the Rule 3 declaration on 18 August 1997 and the relevant change in nominal centre distance had also occurred before the Rules became operative, annual capacity had to be determined only under the Rule 3(3) formula. The later amendment could not override the earlier declaration, and the impugned capacity determination based on Rule 5 was unsustainable.

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Issues: Whether Rule 5 of the Hot Rerolling Mills Annual Capacity Determination Rules, 1997 could be applied to determine the annual capacity of production where the assessee had already furnished the declaration under Rule 3(1) before Rule 5 was inserted with effect from 1.9.1997.

Analysis: The capacity determination framework under Rule 3 required declaration of the relevant parameters and determination of annual capacity on the formula prescribed in Rule 3(3). Rule 5, introduced later by amendment, provided that where the capacity so computed was less than the actual production of 1996-97, the annual capacity would be deemed to be that actual production. The assessee's declaration under Rule 3(1) had been filed on 18.08.1997, before Rule 5 came into force. The change in the nominal centre distance had also been made in April 1997, prior to the operative date of the Rules. In these circumstances, Rule 5 could not be given retrospective operation to cover declarations already made before its insertion. The later Supreme Court decision on Rule 5 was held not to govern this situation because it did not consider cases where the Rule 3(1) declaration itself had been made before 1.9.1997.

Conclusion: Rule 5 was not applicable to the assessee's case, and annual capacity had to be determined only under Rule 3(3). The impugned order was unsustainable.

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