Furnace capacity redetermination and Rule 96ZO compliance defeated the differential duty demand based on earlier capacity fixation.

Under Rule 96ZO, an assessee must opt out of the lump sum duty scheme in the prescribed manner, and capacity redetermination may be required where a crucible is idle. The Tribunal noted that the assessee repeatedly sought redetermination of furnace capacity on that basis, but the Department rejected the request without a speaking order. It also found that the assessee had not validly opted under Rule 96ZO(3) in the prescribed format under Rule 96ZO(4) and had instead paid duty on actual clearances under Rule 96ZO(1). On those facts, the differential demand based on the earlier capacity fixation was not sustainable and was not recoverable.

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Issues: Whether the assessee had validly opted out of the lump sum duty scheme under Rule 96ZO(3), and whether the differential duty demand based on the original capacity determination was sustainable.

Analysis: The assessee had repeatedly sought redetermination of furnace capacity on the ground that one crucible was idle, and the Department rejected that request without a speaking order. The Tribunal noted that the trade notice required suitable determination of capacity where a crucible was idle, and that the rejection of redetermination was not an appealable order. It further found that the assessee had not validly opted under Rule 96ZO(3) in the prescribed format under Rule 96ZO(4), and had been paying duty on actual clearances under Rule 96ZO(1). On those facts, the differential demand raised on the basis of the earlier capacity fixation was not sustainable.

Conclusion: The Revenue's challenge failed and the order dropping the proceedings was upheld; the demand was not recoverable.

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