Rolling mill capacity determination turns on the actual output of the relevant mill, not combined factory production.

For a unit operating more than one rolling mill under a common drive, Rule 5 of the Hot Rerolling Steel Mills Annual Capacity Determination Rules, 1997 required comparison of annual capacity with the actual production of the relevant mill, not the factory's combined output. The Rules were directed to capacity determination for a rolling mill, and the departmental clarification treated the higher-capacity mill as the operative unit where only one mill could run at a time. On the stated facts, because both mills could not be produced simultaneously and verification proceeded on the higher-capacity mill basis, the comparison had to be made against that mill's previous-year production.

---

---

Issues: Whether, for a unit having more than one rolling mill operating under a common drive, the annual capacity under Rule 5 of the Hot Rerolling Steel Mills Annual Capacity Determination Rules, 1997 had to be compared with the actual production of the factory as a whole or with the actual production of the higher-capacity mill only.

Analysis: The Rules contemplated determination of capacity for a rolling mill and not for a factory. The Board's clarification also indicated that where a unit had more than one rolling mill but operated only one at a time, the higher-capacity mill was the relevant unit for capacity determination. On the facts, the appellant had specifically stated that both mills could not be put into production at the same time, and the departmental verification proceeded on the basis of the higher-capacity mill. In that situation, the comparison under Rule 5 had to be made with the actual production of that mill in the previous year, not with the combined production of both mills.

Conclusion: The annual capacity was required to be taken as 6201.79 m.t., and not 10594.508 m.t.; the assessee succeeded.

---