Compounded levy does not apply to job-work automobile components where goods are not shown to be marketable hot-rolled products.

Goods manufactured on job-work basis were held not to fall under the compounded levy scheme merely because they were produced with hot-rolling machinery. The products, including flanges and lock rings made to specification for an automobile manufacturer, were treated in commerce as automobile components rather than hot-rolled products of Chapter 72. As there was no evidence that they were sold by weight in the market as hot-rolled goods, the conditions for assessment under Section 3A were not met. Duty was therefore payable under the regular transaction-value regime, and the redetermination of annual capacity of production was unsustainable.

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Issues: Whether the appellant's products were hot-rolled products liable to assessment under the compounded levy scheme and annual capacity of production basis, or whether they were automobile components assessable under the regular duty regime on transaction value.

Analysis: The products manufactured on job-work basis for Wheels India were found to be flanges, lock rings and similar components made to specification, known in the market as automobile parts and not as hot-rolled products. The reasoning relied on the absence of evidence that the goods were sold by weight in the market as products of Chapter 72, and on the fact that a similar unappealed order had already held identical goods of another job worker to be outside the compounded levy scheme. On that basis, the criterion for Section 3A assessment was not satisfied, and assessment under the regular valuation provision was appropriate.

Conclusion: The products were not liable to be assessed under the compounded levy scheme and the appellant was required to discharge duty only under the regular duty provisions; the redetermination of annual capacity of production was unsustainable.

Final Conclusion: Both the original and appellate orders were set aside and the appeals were allowed with consequential relief.

Ratio Decidendi: Goods manufactured on job-work basis are not liable to compounded levy assessment merely because they can be linked to hot-rolling machinery; such levy applies only when the goods are shown to be marketable and known in commerce as hot-rolled products.

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