Final annual production capacity fixation binds excise duty liability; later omission of the charging provision did not defeat demand.

An unchallenged final determination of annual production capacity binds the assessee for excise duty purposes, even if the capacity was earlier fixed provisionally. The Commissioner's communication confirming capacity in March 2000 attained finality, so the duty demand for the relevant period was sustained on that basis. The plea that capacity had not been finally determined was rejected as factually incorrect. The omission of Section 3A of the Central Excise Act, 1944 did not displace the liability, because the duty arose from the final and unchallenged fixation already made before the omission. The challenge to the demand therefore failed.

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Issues: Whether the duty demand for the period August 1997 to March 2000 could be sustained on the basis of the annual capacity of production finally determined by the Commissioner, and whether the omission of Section 3A of the Central Excise Act, 1944 displaced the liability.

Analysis: The annual capacity of production had initially been fixed provisionally, but it was later finally confirmed by the Commissioner's communication dated 13.03.2000. That final determination was not challenged and therefore attained finality. In such a situation, the assessee was bound to discharge duty on the basis of the capacity so determined. The plea that the capacity had not been finally determined was rejected as factually incorrect. The argument based on omission of Section 3A from the Central Excise Act, 1944 was also rejected because the final capacity determination had already been made in March 2000 and the duty liability arose from the unchallenged final fixation.

Conclusion: The duty demand was valid and the assessee's challenge failed.

Ratio Decidendi: An unchallenged final order determining annual production capacity binds the assessee, and duty leviable on that basis cannot be avoided merely because the charging provision was later omitted.

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