Statutory hearing before capacity reassessment: induction furnace duty determination set aside and remanded for fresh decision.

Section 3A of the Central Excise Act requires an opportunity of hearing before annual production capacity is fixed at a figure different from the assessee's claim. Where the capacity of an induction furnace was revised upward without giving such hearing, the determination was held unsustainable and had to be set aside. The matter was remanded for fresh fixation of capacity after affording the assessee a personal hearing, with duty payment under Rule 96ZO(3) not curing the statutory defect.

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Issues: Whether, while determining the annual capacity of an induction furnace at a figure higher than the one claimed by the assessee, an opportunity of being heard was required to be afforded under Section 3A of the Central Excise Act, 1944 notwithstanding payment of duty under sub-rule (3) of Rule 96ZO of the Central Excise Rules, 1944.

Analysis: The dispute concerned determination of furnace capacity for duty purposes. The assessee's capacity was revised upward without affording an opportunity to explain its case. Section 3A specifically contemplates that where the annual production capacity is determined higher or lower than the capacity claimed, the assessee must be given an opportunity to present its case. The absence of such hearing vitiated the determination and warranted reconsideration.

Conclusion: The matter was required to be remanded for fresh determination of furnace capacity after giving the assessee an opportunity of personal hearing; the appeal succeeded by way of remand.

Final Conclusion: The capacity determination was set aside for want of the statutory opportunity of hearing, and the matter was sent back to the Commissioner for decision in accordance with law.

Ratio Decidendi: When a statute expressly requires an opportunity to be heard before determining annual production capacity at a figure different from that claimed, failure to afford such opportunity renders the determination unsustainable and calls for remand.

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