Excise duty recovery barred on a superseded production-capacity finding until fresh redetermination is completed.

Coercive recovery of excise duty could not be sustained on the basis of an earlier annual production capacity determination that had already been set aside on appeal. Because the Tribunal had remitted the matter for fresh consideration, the competent authority was required to redetermine the unit's actual production capacity before insisting on duty payment. The High Court therefore directed fresh determination within three months and restrained the respondents from recovering excise duty on the superseded basis until that exercise was completed.

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Issues: Whether the authorities could insist on payment of excise duty on the basis of an earlier determination of annual production capacity that had been set aside, and whether a direction was warranted for fresh determination of production capacity.

Analysis: The petitioner's production capacity had earlier been determined under the special excise scheme, but that order was set aside in appeal and the matter was remitted for fresh decision. The subsequent stand that Section 3A(4) had no application because the petitioner had opted for payment under Rule 96ZO(3) did not conclude the controversy, since the Tribunal had already required redetermination. In these circumstances, coercive recovery on the basis of the earlier superseded determination was not justified until the competent authority decided the matter afresh.

Conclusion: The authority was directed to redetermine the actual production of the unit within three months, and the respondents were restrained from compelling payment of excise duty on the basis of the earlier determination until such redetermination was made.

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