Capacity-fixation demand cannot survive after the basis order is set aside; duty must be redetermined on actual production.

A demand founded entirely on a prior order fixing annual capacity cannot survive once that foundation has been set aside. Duty liability must then be redetermined on the legally applicable basis of actual production under Section 3A(4), with observance of natural justice. The impugned demand was therefore unsustainable and was set aside, and the matter was remitted for fresh determination on that basis.

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Issues: Whether the demand order was sustainable after the foundation order fixing annual capacity had already been set aside, and whether the duty liability was required to be redetermined on the basis of actual production under Section 3A(4).

Analysis: The impugned demand was founded on an earlier Commissioner's order fixing annual capacity. That basis had already been set aside by the Tribunal, which had directed redetermination of duty liability with reference to actual production under Section 3A(4). In these circumstances, the demand order could not stand. The matter also required redetermination in accordance with natural justice.

Conclusion: The impugned order was unsustainable and was set aside. The appeal was allowed, and the Commissioner was directed to redetermine the duty liability under Section 3A(4) in accordance with natural justice.

Ratio Decidendi: A demand founded entirely on a capacity-fixation order that has already been set aside cannot survive, and duty liability must be redetermined on the legally applicable basis.

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