Prior notice and written approval control revised annual capacity, with duty liability changing only after lawful redetermination.

The scheme governing annual capacity determination required a manufacturer to give prior notice in the prescribed manner and obtain written approval before any change in manufacturing parameters took effect. Duty liability continued under the existing arrangement until the department received the request and carried out redetermination under the rules. A unilateral proposal or letter of intimation did not itself shift the revised duty position; the revised capacity operated only from lawful processing and approval of the change request.

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Issues: Whether, on a proposed change in the parameters governing annual capacity determination, the assessee could claim the revised duty position from the date of the letter of intimation or only from the date on which the Commissioner actually received and acted upon the request under the applicable rules.

Analysis: The governing scheme required a manufacturer to intimate the proposed change in the prescribed manner at least one month in advance and to obtain written approval before making the change. On the facts, the intimation was not received by the department until October 1999, and the Commissioner acted on it with effect from 22-10-1999. Until redetermination under the rules took place, the assessee remained liable to pay duty under the existing arrangement. The cited earlier decision was found inapplicable on the facts.

Conclusion: The refixation of annual capacity and the duty demand were held to be valid, and the assessee's challenge failed.

Final Conclusion: The appeal was rejected because the revised capacity could operate only from the date the statutory change request was received and processed, leaving the existing duty arrangement undisturbed until then.

Ratio Decidendi: Where the statutory scheme requires prior notice and written approval before a change in manufacturing parameters, the revised capacity and corresponding duty position take effect only from lawful redetermination, not from the date of the assessee's unilateral proposal.

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