In Brief
Bhuwalka Steel Industries challenged Rule 5 of the 1997 Capacity Determination Rules, which adjusted the Annual Capacity of Production upward to match actual production in 1996-97 if calculated capacity fell short. The appellants argued Rule 5 was ultra vires and violated Article 14 by creating two classes of manufacturers. The Supreme Court held that Rule 5 does not create an impermissible legal fiction but rather a rebuttable presumption (rule of evidence), which subordinate legislation may validly establish. The Court distinguished legal fictions—which assume facts known to be false—from presumptions, which assume facts that may prove true. It remanded the matter to a larger bench to examine whether Rule 96ZP(3) (which bars Section 3A(4) relief) was reconcilable with statutory rights to establish actual lower production periodically.
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