Deeming provision in capacity determination rules must be applied as written; actual production figure cannot override the amended rule.

Rule 5 of the Hot Re-rolling Steel Mills Annual Capacity Determination Rules, 1997 introduced a deeming provision for redetermining annual production capacity where the capacity worked out under Rule 3(3) was lower than actual production for 1996-97. Read with Section 3A(2) of the Central Excise Act, 1944, the rule had to be applied according to its plain language for the relevant period, and the Tribunal could not ignore its effect in favour of the earlier actual-production figure. The document states that the Tribunal's approach was unsustainable and that the reference was answered against the assessee and in favour of the Revenue.

---

---

Issues: Whether Rule 5 of the Hot Re-rolling Steel Mills Annual Capacity Determination Rules, 1997, inserted with effect from 1-9-1997, applied to the redetermination of annual production capacity for the relevant period and whether the Tribunal was right in ignoring the actual production figure of 1996-97 while answering the reference.

Analysis: Section 3A(2) of the Central Excise Act, 1944 authorises levy of duty with reference to annual production capacity determined under the prescribed rules. Rule 4(2) requires prior intimation and approval where changes in installed machinery affect capacity. Rule 5, inserted by notification, created a deeming provision that where the capacity determined under Rule 3(3) was less than the actual production of 1996-97, the deemed capacity would equal that actual production. The amended rule was in force for the period in question, and the Tribunal failed to consider its effect. The reference also stood governed by the principle that a taxing provision must be applied according to its clear language, and once the assessee falls within the statutory terms, the levy must follow.

Conclusion: The Tribunal's view was unsustainable. Rule 5 had to be given full effect, and the reference was answered against the assessee and in favour of the Revenue.

Ratio Decidendi: Where a taxing rule contains a clear deeming provision governing redetermination of annual production capacity, the provision must be applied according to its plain language for the relevant period and cannot be ignored in favour of an earlier actual-production figure.

---