Annual capacity determination must follow remand directions and fair hearing requirements, with verification material supplied before fresh adjudication.

Annual capacity of a furnace had to be determined on the basis directed in the earlier remand, not under Rule 96ZO(3), because the authority could not depart from binding remand instructions. The Tribunal held that the assessee was required to furnish the particulars under Section 3A(3) and Rules 96ZO(1) and 96ZO(2), but a fresh order could be passed only after verification of the documents, supply of the verification report, and a fair hearing. The determination made under Rule 96ZO(3) was set aside, and the matter was remanded for fresh adjudication on the basis of actual production.

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Issues: Whether the annual capacity of production of the furnace was required to be determined on the basis of actual production rather than under Rule 96ZO(3), and whether fresh determination had to be made after supplying the verification report and granting a hearing.

Analysis: The earlier remand had directed consideration of actual production. In the impugned order, the Commissioner nevertheless proceeded under Rule 96ZO(3) on the view that the assessee, having opted for that provision, was not entitled to determination on actual production. That approach was contrary to the remand directions. The Tribunal also accepted that the assessee had to furnish the particulars contemplated by Section 3A(3) of the Central Excise Act, 1944 and Rule 96ZO(1) and Rule 96ZO(2) of the Central Excise Rules, 1944, and that a fresh order could be passed only after verification of the documents and after a fair hearing. The verification report was also required to be supplied before the defence was heard.

Conclusion: The determination under Rule 96ZO(3) was set aside and the annual capacity of production was directed to be determined on the basis of actual production. The matter was remanded for fresh decision after verification and hearing, in favour of the assessee.

Final Conclusion: The assessee succeeded on the question of the basis for capacity determination, and the dispute was sent back for fresh adjudication in accordance with the earlier remand directions and principles of fair hearing.

Ratio Decidendi: An authority cannot depart from binding remand directions and must determine annual capacity on the legally directed basis, after supplying relied-upon material and affording a reasonable opportunity of hearing.

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