Compounded levy capacity must exclude sealed, uninstalled furnace not actually put to use in production calculations.

Annual capacity under the compounded levy scheme must be determined on the basis of furnace capacity actually installed and put to use, not on equipment merely present in the factory. A sealed, uninstalled, and non-operational furnace could not be counted in computing annual production capacity. On the admitted facts that the 3.0 MT furnace remained sealed and unused, its inclusion in the capacity computation was unsustainable, and the reassessment fixing capacity at 3.4 MT was upheld in favour of the assessee.

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Issues: Whether a furnace that was sealed, uninstalled, and not in working condition could be included for determining the annual capacity of production under the compounded levy scheme.

Analysis: The admitted position was that the 3.0 MT furnace remained sealed and was not in use. Capacity determination under the relevant scheme had to proceed on the basis of the furnace actually installed and put to use, not merely on the basis that equipment was physically present in the factory premises. The inclusion of the sealed furnace in the total capacity was therefore unsustainable.

Conclusion: The annual capacity could not include the sealed and uninstalled furnace, and the reassessment at 3.4 MT was upheld in favour of the assessee.

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