Deemed annual capacity under invoice-based assessment cannot be reopened on later trial production without proof of fraud or alteration.

Section 3A assessment for induction furnaces is based on deemed annual capacity, and Rule 3(1) requires the Commissioner to act on an authenticated invoice where available. If capacity has been fixed after enquiry on that basis, the Act and Rules do not confer any general power to reopen it merely because later trial production shows higher output. Re-determination is justified only if the original invoice is shown to be false or unrelated to the furnace, or if the furnace has been altered after fixation. In the absence of such proof, later actual-production trials cannot support a suo motu revision of capacity.

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Issues: Whether the Revenue could re-determine the annual capacity of production of an induction furnace after it had already been fixed on the basis of an authenticated invoice, in the absence of evidence that the invoice was fraudulent or that the furnace had been altered; and whether the scheme under the relevant rules permitted a suo motu review on the basis of later trial productions.

Analysis: The scheme under section 3A proceeds on the basis of deemed annual capacity, not actual production. Rule 3(1) requires the Commissioner to call for and act upon an authenticated invoice, and only where such invoice is unavailable or is shown to be not relatable to the furnace can recourse be had to the alternative method under Rule 3(2). Once capacity has been fixed on the basis of the authenticated invoice after enquiry, there is no provision in the Act or the Rules empowering the Revenue to reopen that determination merely because later trials indicate a higher actual output. The record also contained no evidence that the invoice was false or that the assessee had surreptitiously modified the furnace. In such circumstances, the later trial production could not justify a unilateral re-fixation of capacity.

Conclusion: The re-determination of capacity was not permissible and was set aside; the appeal succeeded and the assessee obtained consequential relief.

Final Conclusion: The final legal effect is that a capacity determination made under the prescribed invoice-based procedure cannot be reopened suo motu by the department without proof impeaching the invoice or showing a post-determination change in the furnace.

Ratio Decidendi: Where annual capacity is fixed under the statutory invoice-based method, the Revenue cannot invoke later actual-production trials to revise that determination unless the original invoice is shown to be false or the furnace is shown to have been altered, because the Act and Rules contain no general power of suo motu review.

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