Per C.N.B. Nair :

M/s. Sawan Mal Shibu Mal Steel Rolling Mills manufactures hot re-rolled products of non-alloy steel by operating a hot steel re-rolling mill. They are liable to pay duty at compounded rates in terms of Section 3A of Central Excise Act 1944. The duty is determined depending on the annual capacity of production, or such factors relevant to the annual capacity of production of the factory in terms of sub-section (2) of Section 3A of the Central Excise Act. Further, Hot Rolling Steel Mills Annual Capacity Determination Rules 1997 issued under sub-section (2) of Section 3A of Central Excise Act laid down, how the annual capacity of hot re-rolling mills is to be determined. Rule 3 of these rules stipulates that annual capacity shall be determined in the manner laid down therein. The formula for determination of the annual capacity as stated under sub-rule (3) of Rule 3 is as under :-

"Annual Capacity = 1.885x10-4

Number of utilised hours (in metric tonnes)"

Rule 4 of the same Rule relates to calculation of capacity of production among other things, in the case of "any change in the mill capacity". Sub rule (2) of that rule reads as under :-

"(2) In case a manufacturer p