Annual capacity must reflect actual production where formula-based output gives inconsistent results for different products.

Annual capacity of production under the statutory scheme could not be fixed mechanically by treating a formula-based maximum output as identical to ACP where the formula produced different results for different CTD bars. In the absence of technical material showing that maximum capacity and ACP were necessarily the same, the authority had to examine whether the assessee's actual production better reflected the correct capacity. The capacity determination was therefore set aside and remitted for fresh consideration on the basis of actual production, giving the assessee another opportunity to establish the correct ACP.

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Issues: Whether the annual capacity of production of the mill could be fixed solely on the basis of the maximum capacity inferred from the formula and different 'd' values for different CTD bars, or whether the actual production of the assessee had to be examined for determining the capacity.

Analysis: The capacity determination made by the Commissioner treated maximum production capacity as synonymous with annual capacity, although the formula yielded different results depending upon the type of CTD bar and the relevant 'd' value. The record did not show technical material establishing that such maximum capacity and ACP were necessarily identical. Since the statutory scheme permitted examination of actual production where the formula-based result did not reflect the correct position, the capacity determination required reconsideration on the basis of the assessee's actual production.

Conclusion: The matter was required to be examined afresh by the Commissioner on the question whether actual production could be taken as the ACP.

Final Conclusion: The capacity determination was set aside and the dispute was sent back for fresh consideration on the basis of actual production, giving the assessee another opportunity to establish the correct ACP.

Ratio Decidendi: Where formula-based annual capacity determination produces inconsistent results for different products, the authority may have to examine actual production before fixing ACP under the statutory scheme.

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