Electric furnace capacity under compounded levy scheme must be computed for the whole furnace, not excluding alloy ingot production.

Under the Compounded Levy Scheme, the annual capacity of an electric furnace had to be determined on the basis of the furnace as a whole, not by excluding capacity attributable to alloy ingot production. The assessee manufactured both non-alloy ingots covered by the scheme and alloy ingots outside it, but the Tribunal held that the statutory capacity calculation was not affected by the separate treatment of alloy ingots. The Commissioner's approach, supported by the Board's circular, was upheld, and exclusion of alloy ingot production from the furnace capacity calculation was rejected.

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Issues: Whether, while determining the annual capacity of an electric furnace under the Compounded Levy Scheme, the capacity attributable to the manufacture of alloy ingots should be excluded.

Analysis: The appellants manufactured both non-alloy ingots covered by the Compounded Levy Scheme and alloy ingots not covered by it. The Tribunal held that the scheme required the annual capacity to be determined on the basis of the furnace as a whole, and that the production prescribed in relation to alloy ingots had no bearing on that determination. The view taken by the Commissioner was consistent with the Board's circular relied upon in the order.

Conclusion: The exclusion of alloy ingot production from the furnace capacity calculation was not accepted and the issue was decided against the assessee.

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