Excise liability survives omission where saving provision applies, and furnace capacity must follow the statutory formula.

Omission of Section 3A and Rule 96ZO(3) did not extinguish liability for a period when the excise levy was in force, because Section 38A preserved accrued rights, liabilities and proceedings; recovery remained maintainable. The note also explains that annual capacity under the Induction Furnace Annual Capacity Determination Rules, 1997 is fixed by the prescribed installed-capacity formula, not by whether furnaces were sealed, unsealed, or operated simultaneously, and that parity with another unit cannot alter the statutory method. The orders sustaining duty liability and capacity determination were therefore left undisturbed.

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Issues: (i) Whether omission of Section 3A of the Central Excise Act, 1944 and Rule 96ZO(3) of the Central Excise Rules, 1944 extinguished the liability already incurred for the period when those provisions were in force and barred proceedings by reason of Section 38A of the Central Excise Act, 1944. (ii) Whether the annual capacity of production had to be determined on the basis of sealed or unsealed furnaces and actual simultaneous operation, and whether the appellant could claim parity with another unit for determination of furnace capacity.

Issue (i): Whether omission of Section 3A of the Central Excise Act, 1944 and Rule 96ZO(3) of the Central Excise Rules, 1944 extinguished the liability already incurred for the period when those provisions were in force and barred proceedings by reason of Section 38A of the Central Excise Act, 1944.

Analysis: The liability related to a period when the charging provision and the rule were admittedly in force. Section 38A of the Central Excise Act, 1944 preserves the previous operation of the amended or repealed provision and protects rights, obligations, liabilities, and proceedings already accrued or initiated. The omission of the charging provision did not wipe out the liability incurred during the operative period of the levy. The reasoning accepted that the proceeding for recovery remained maintainable notwithstanding the later omission.

Conclusion: The challenge to liability on the ground of omission failed and was answered against the appellant.

Issue (ii): Whether the annual capacity of production had to be determined on the basis of sealed or unsealed furnaces and actual simultaneous operation, and whether the appellant could claim parity with another unit for determination of furnace capacity.

Analysis: Under the Induction Furnace Annual Capacity Determination Rules, 1997, annual capacity is to be determined on the basis of the installed furnace capacity according to the prescribed formula. Sealing or unsealing of furnaces is relevant for abatement of duty, not for fixing annual capacity. The inability to run furnaces simultaneously, the sanctioned load, and the plea of parity did not alter the statutory method of determination. Negative equality could not be claimed merely because some other assessee may have received a different treatment.

Conclusion: The capacity determination made by the authorities was upheld and the appellant's plea on capacity and parity was rejected.

Final Conclusion: The appeal was found to be without merit, and the orders sustaining duty liability and capacity determination were left undisturbed.

Ratio Decidendi: Omission of a taxing provision does not extinguish liabilities and proceedings that accrued while it was in force where a saving provision preserves them, and annual production capacity under the special excise scheme must be determined strictly by the statutory formula based on installed capacity, not by actual operational use or selective parity claims.

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