Compounded levy option and furnace capacity assessment: invoice-based determination prevails, and opt-out takes effect from the next month.

Section 3A(4) and Rule 96ZO(3) were treated as alternative assessee-based procedures under the compounded levy regime, so an assessee could opt out for a later period and the change would take effect from the first day of the succeeding month rather than being confined to the next financial year. For annual capacity determination under Rule 96ZO(3), the Commissioner had to rely on the authenticated furnace manufacturer's invoice whenever it was available; the comparable furnace and technical consultation method applied only when no invoice existed. The governing principle was that the invoice-based method was the primary basis for capacity assessment.

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Issues: (i) Whether an assessee who had opted for determination under Rule 96ZO(3) could opt out of the compounded levy scheme and seek determination under Section 3A(4); and from what date such opting out would take effect. (ii) Whether annual capacity of production under Rule 96ZO(3) had to be determined on the basis of the furnace manufacturer's invoice when available.

Issue (i): Whether an assessee who had opted for determination under Rule 96ZO(3) could opt out of the compounded levy scheme and seek determination under Section 3A(4); and from what date such opting out would take effect.

Analysis: The operative principle was that Section 3A(4) and Rule 96ZO(3) represent alternative procedures at the assessee's option, and the assessee cannot be compelled to remain in the compounded levy procedure once the option is exercised for a later period. The period of opt-out was held not to be confined to the next financial year, because the duty liability was monthly and the statutory scheme did not use the expression "subsequent financial year".

Conclusion: The assessee could opt out for a subsequent period, and the opt-out would operate from the first day of the succeeding month.

Issue (ii): Whether annual capacity of production under Rule 96ZO(3) had to be determined on the basis of the furnace manufacturer's invoice when available.

Analysis: The governing rule required the Commissioner to determine annual capacity on the basis of the authenticated manufacturer's invoice. Only if such invoice was unavailable could recourse be taken to the alternative method of comparable furnace capacity and technical consultation. Where the invoice was available, the alternative method was not to be used.

Conclusion: Annual capacity of production had to be determined on the basis of the furnace manufacturer's invoice whenever available.

Final Conclusion: The batch of appeals was disposed of by applying the assessee's right to opt out from the next month and by directing fresh capacity determination in the cases where the furnace invoice basis had not been applied, while maintaining the orders in cases where no interference was warranted.

Ratio Decidendi: Under the compounded levy regime, Rule 96ZO(3) and Section 3A(4) operate as alternative assessee-based procedures, and when the manufacturer's invoice is available it is the primary and ative basis for determining furnace capacity.

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