Annual capacity of production must be fixed only by the jurisdictional Commissioner, not the appellate authority on technical opinion alone.

Under the capacity-based excise scheme, annual capacity of production can be fixed or refixed only by the jurisdictional Commissioner under section 3A of the Central Excise Act and the relevant capacity determination rules. The Commissioner (Appeals) could not substitute technical opinion or independently decide the furnace type for capacity assessment. The appellate order was therefore unsustainable, and the matter had to be remanded for fresh statutory determination by the competent authority, with consequential reworking of duty, if any.

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Issues: Whether the Commissioner (Appeals) could set aside the duty demand and treat the furnace as batch type without refixation of the annual capacity of production by the jurisdictional Commissioner, and whether the matter had to be remanded for fresh determination.

Analysis: Under section 3A of the Central Excise Act, 1944 and the Hot Re-Rolling Mills Actual Capacity Determination Rules, the power to fix or refix the annual capacity of production vested in the jurisdictional Commissioner. The assessee's revised declaration after reopening of the factory was not acted upon by a fresh determination from that authority. The technical committee had given a divided opinion, but such opinion could not substitute the statutory function of the jurisdictional Commissioner. The Commissioner (Appeals) lacked authority to undertake the refixation himself or to finally determine the furnace type for capacity assessment.

Conclusion: The order of the Commissioner (Appeals) could not be sustained, and the matter was required to be remanded to the jurisdictional Commissioner for refixation of annual capacity of production and consequential reworking of duty, if any.

Final Conclusion: The appeal was allowed by setting aside the impugned order and restoring the matter for fresh statutory determination by the competent authority.

Ratio Decidendi: The annual capacity of production under the capacity-based excise scheme can be fixed or refixed only by the jurisdictional Commissioner, and not by the appellate authority on the basis of technical opinion alone.

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