Customs, Excise and Gold Tribunal - Delhi
Bramec Suri (P) Limited vs Collector Of Central Excise on 8 May, 1986
Equivalent citations: 1986(26)ELT423(TRI-DEL)
ORDER V.T. Raghavachari, Member (J)
1. On 15-2-1973 Preventive Officers of Central Excise Department, Gaziabad, visited the factory of the appellants, M/s Bramec Suri (P) Ltd., and samples of asbestos yarn manufactured by the appellants were drawn. On the basis of the report of the Chemical Examiner on test of the samples drawn a show cause notice dated 23-11-73/ 20-12-1973 was issued. It was stated therein that the yarn manufactured by the appellants was classifiable under TI 18E CET, but that the appellants had not taken out the necessary licence or followed the requisite excise formalities in respect of manufacture and clearance thereof. The appellants were called upon to show cause why duty on such goods produced and cleared during the period 1-4-1972 to 31-3-1973 should not be demanded and why penalty should not be imposed on them. After protracted correspondence, the appellants sent a reply dated 5-12-1977. On adjudication the Collector of Central Excise, Kanpur by order dated 29-6-1978 held the charges established. He imposed a penalty of Rs. 10 lakhs and also demanded duty of Rs. 4,32,412.41 under Rule 9(2) of the Central Excise Rules. The appellants filed an appeal to the Central Board of Excise & Customs. The Board under order dated 7-6-1980 confirmed the order of the Collector except to the extent of reducing the penalty to Rs. 4,32,000/-. The appellants preferred a revision petition to the Government which, on transfer, nas been numbered as Excise Appeal No. 816/80-D of this Tribunal.
2. In respect of similar asbestos yarn manufactured and cleared by the appellants during the period November 1973 to March, 1976, a fresh, show cause notice dated 25-10-1978 was issued to the appellants and on adjudication the Collector of Central Excise, Meerut, passed order on 4-7-1983 imposing a penalty of Rs. 10 lakhs and confirming the demand for payment of duty on the quantity of goods as mentioned in the show cause notice. The appellants have preferred an appeal to this Tribunal against the said order and the same is Excise Appeal No. 2173/83-D.
3. We have heard Shri K. Narasimhan, Advocate, assisted by Shri Lachman Dev, Consultant, on behalf of the appellants and Shri K.C. Sachar for the department.
4. Since both the appeals raised similar issues Shri Narasimhan submitted that he would advance argurfientS in Excise Appeal No. 816 of 1980, and that he would thereafter supplement the said arguments to the extent necessary in the other appeal. The departmental representative had also no objection to this course. Accordingly the submissions were heard in appeal No. 816 of 1980 on both sides and then supplementary arguments to the extent necessary were heard in the other appeal. Therefore, both the appeals are being disposed under this single order.
5. The appellants are manufacturers of brakelinings and clutch facings classifiable under TI 34A CET. The brakelinings are either moulded brakelinings or woven brakelinings. Asbestos fibre is used in the manufacture of moulded brakelinings. It is in the manufacture of woven brake-linings and clutch facings that asbestos yarn is used and it is this asbestos yarn which is the subject matter of these two appeals. The department claims that the said yarn is classifiable under TI 18E CET during the relevant period, while the appellants contest the same.
6. TI 18E was introduced on 17-3-1972 and as introduced it reads as follows:-
"18E Yarn, all sorts not elsewhere specified, in (or in relation to) the manufacture of which any process is ordinarily carried on with the aid of power and containing any two or. more of the following fibres, namely ;
(i) Cotton;
(ii) Silk;
(iii) Wool;
(iv) Jute (including Bimlipatan Jute or mesta fibre); and
(v) Man-made fibre".
The item underwent a change on 1-3-1973 when it read as follows:-
"18E. Yarn, all sorts, not elsewhere specified, in or in relation to the manufacture of which any process is ordinarily carried on with the aid of power".
Simultaneously notification No. 50/73 CE dated 1-3-1973 was issued whereby the Central Government fully exempted "Yarn, all sorts, other than the yarn containing any two or more of the fibres specified in the notification". Cotton and man-made fibres were two, among others, of the fibres specified in the notification.
7. In respect of the process of manufacture of the asbestos yarn the same is described by the appellants in their reply dated 15-12-1977 to the first show cause notice as follows:-
"Apart from moulded stocks, we also obtain by spinning, products which are broadly classified by us into (i) metallic and (ii) Non-metallic yarns. The metallic yarns also known as wire inserted yarns are pilain asbestos yarns with an insert of fine wires of brass or zinc: these are described for the' sake of convenience as BM or ZM (though occasionally copper is a.lso used and the quality produced is called CM). The non-metallic yarns contain either a core of cotton yarn around which yarn spun out of asbestos and viscose fibres is used for braiding or are comprised entirely of just asbestos and viscose fibres. The insert or core of cotton yarn is provided to reinforce the asbestos viscose yarn. Asbestos fibre and viscose staple fibre are blended, mixed, carded and then spun into yarn. After this yarn has come into existence, it is either used as such (as non-metallic yarn) or is twisted or plied with light gauge wire or cotton yarn which are introduced as cores with a view to imparting tensile strength to the single yarn. The twisted or plied yarns containing, in addition to yarn spun out of asbestos and viscose fibres, a wire of brass, zinc or copper and used as such are called metallic yarns while the twisted or plied yarns containing, in addition to yarn spun out of asbestos and viscose fibres, a core of cotton yarn are known as non-. metallic. Occasionally a strand each from metallic and non-metallic yarns is drawn and twisted together according to the practice requirements of the end product. Thus the products falling in the category of asbestos yarn manufactured by us are (i) Metallic Yarns BM, ZM or CM ; (ii) Non-metallic yarns containing only asbestos and viscose or asbestos, viscose and cotton yarn and (iii) some mixed qualities containing both a light guage wire and a lead of cotton yarn".
8. The appellants claim, and it is not disputed by the department, that they have no provision for spinning cotton yarn and that cotton yarn used by them in the manufacture of asbestos yarn is purchased by them duty paid from the market. It is thus seen that the asbestos yarn in issue before us consists of yarn spun out of a mixture of asbestos fibre and viscose staple fibre twisted or plied with a cotton yarn, metal also being used in some instances.
9. In disputing the liability for classification under TI 18E, the main argument of the appellants is that the cotton content of the yarn is by way of cotton yarn and not cotton fibre and secondly that the final process is one of hraiding which would not be the same as doubling. Their arguments are summarised in their above noted reply to the show cause notice as follows:-
"Without prejudice to our contention that asbestos yarn manufactured by us, at the material point of time, did not fall under item 18E, because (i) the bulk of our production contains a single fibre, namely, viscose; (ii) where such yarn is reinforced with a cotton core, the material used is cotton yarn and not cotton fibre; (iii) such qualities of it as contain cotton are essentially mixed yarns made out of duty paid yarns which were considered to be exempt from duty until the issue of tariff advice 12/74 ; and (iv) the qualities in question unmistakably are braided yarn i classifiable in terms of the Trade Notice (Annexure b) as "All other goods not elsewhere specified" falling under Item 68 and not under Item 18E".
10. On the other hand, the contention for the department is that so long as cotton fibre as well as viscose staplefibre is present in the asbestos yarn manufactured by the appellants (even though the cotton fibre may be present in the form of cotton yarn) the asbestos yarn would fall under,TI 18E, and that the process of braiding has brought into existence a new excisable commodity which would fall under TI 18E.
11. Shri Narasimhan contended that unless viscose staple fibre and cotton fibre as such had been mixed and then spun (along with asbestos fibre) into a yarn the resultant yarn would not be classifiable under TI 18E. But we find that similar contention had been raised in other cases before the Tribunal but rejected. We may note in this connection the case of Porritts and Spencer (Asia) Ltd. v. Collector of Central Excise, Delhi, (1985 ECR 272). The period in dispute in the said case was 1-3-1971 to 31-10-1976. That is to say the period covered included the period after the introduction of TI 18E and the amendment thereof subsequently in 1973. In that case also the appellants had contended (though, in the context of the facts of that case, this contention had to be considered with reference to the period subsequent to 29-10-1974) that as there was no mixing of fibre before spinning in the case of their multifeld yarn the said yarn would not be a blended yarn. The Tribunal rejected this contention. It held the word "fibre" used in the notification dated 1-3-1973 as also in the Tariff description of TI 18E before 1-3-1973 was an unqualified one and the contention of the appellants that all the constituent fibres must have been spun together was not acceptable. It was held that even when yarn had been spun out of fibres and then converted into a composite yarn by the process of doubling etc., the said yarn would fall under TI 18E from 1.3.1972 and would also be covered by the notification of 1973.
12. Two other judgments which would also be relevant in this connection are -
(1) General Industrial Society Ltd. v. Collector of Central Excise (1983 ELT 2056) and (2) General Industrial Society Ltd. v. Collector of Central Excise (1983 ELT 2497).
It had been held in the said decisions also that the process of doubling and twisting of two different types of yarn would result in manufacture of yarn classifiable under TI 18E and not under TI 68.
13. Shri Narasirnhan submitted that in any event the department itself had issued trade advices which would support the contention of the appellants as to classification and for this reason also the present case of the department should not be accepted. His reference was to Trade Notice No. 224 of 1976 dated 3-11-1976 of the Poona Collectorate, Trade Notice No. 207 of 1976 of the Kanpur Collectorate and Trade Advice No. 26 of 1976 dated 18-10-1976 by the Board. But it will be seen that trade notices and the trade advice of the Board relied on by the appellants are all subsequent to the period when disputes arose in the present case. It may also be noted that earlier the department wanted to rely upon Trade Advice No. 12 of 1974 which, purporting to follow the opinion of the Law Ministry, held that mixed yarn manufactured from duty paid yarn would be a new commodity dutiable as such under TI 18E. The appellants themselves had then opposed this plea. This may be seen from their reply to the show cause notice where at the end of paragraph 5 they have stated "In this context we also pray that the present proceedings may kindly be adjudged on merits and not on the basis of the tariff advice referred to or the opinion given by the Ministry of Law". Thus at the earlier stages the appellants were contending that the adjudicating authority, as quasi-judicial authority, must come to its own conclusion and not be led by any Trade Advice or the opinion of the Law Ministry. There can also be no doubt that the opinions contained in the Trade Notices would not be binding on this Tribunal on the question of proper classification, nor could it be said that there is any question of promissory estoppel involved, since the trade advices relied on by the appellants are all subsequent to the disputes having arisen in the present cases.
14. On the question of the nature of the process carried on by the appellants this is what they had stated in their reply to the show cause notice:-
"Braiding includes twisting, plaiting and intertwining and inasmuch as the yarns produced by us are twisted (which expression-------includes plaiting) and plied, they are clearly covered by the expression braided yarns and since they are manufactured out of duty paid yarns (both cotton and viscose staple fibre) they are classifiable, as stated in the Trade Notice, not under item 18E but under item 68".
In para 5 of that reply the appellants had referred to - Tariff Advice 12/74 dated 3-9-1974. The tariff advice related to durability ot doubled ya/rn as a distinct excisable commodity arising' out of doubling of two duty paid yarns. It is significant that the appellants do not dispute the applicability on the basis that the principle does not apply to their yarn but only on the ground that as their period is prior to 3-9-1974 their case cannot be decided on the basis of this Tariff Advice. This would only show, that the appellants were not denying that braided yarn would be doubled yarn.
15. We may also note that the tariff-entry 18E read "Yarn all sorts not elsewhere specified and containing any two or more of the following fibres". Thus the requisite for Classification under TI 18E would be that the yarn in question should contain any two or more of the fibres mentioned and not that the yarn should have been spun with two or more of the said fibres.
16. Taking into consideration all the above circumstances, we hold that the asbestos yarn manufactured by the appellants was classifiable under TI 18E as had been held by the department.
17. Shri Narasimhan then contended that even if the subject goods are to be held to fall under TI 18E, the orders of the Collector or the Board cannot be supported since the show cause notice itself had been issued on entirely incorrect facts and on assumptions drawn from such incorrect facts, and, therefore; the quantification of duty was also wholly incorrect. He raised several submissions with reference to the above contention. The first was that the entire show cause notice proceeded on the basis of samples drawn and test carried out on such sampales, but that the test results would have been representative of the lots of 50 Kg. from which the samples had been drawn and the said results could not have been ipso facto applied with reference to the entire production for the periods for which demands have been raised.
18. This contention had been raised in the adjudication that followed the first show cause notice, but had been rejected by the Collector in his order dated 29-6-1978. This had been dealt with by him in pages 7 and 8 of his order. He has mentioned that the samples were drawn according to the usual procedure and no objection had been raised at that time by the appellants that the samples were not representative of their entire production, and that the subsequent letters of the appellants were also silent on this point. He accordingly held that the samples were fully representative of the production of asbestos yarn and belting by the appellants. Shri Narasimhan contents that this conclusion was improper. It is seen from the test memos (1 of 1973 and 2 of 1973) and the declaration forms connected -therewith, that the samples of asbestos yarn and asbestos belting had been drawn, the necessary entries in connection therewith in the declaration forms being that they were out of 50 Kg. each. The manager of the appellants has signed these forms the declaration being to the effect that the appellants were perfectly satisfied with the manner of sampling. Shri Sachar contends that if the appellants were to feel that the different lots would have different composition, and therefore, the samples should be drawn from each lot, it was open to them to have objected to the method of sampling at the time of drawal of samples and the fact that they had not done so would establish that the contention now raised is incorrect and imaginary. In this connection we may further note that in their reply dated 15-12-1977 to the show cause notice the objection with reference to the samples (page 4 of the reply) reads -
"We submit that the samples taken by the officers on 15-2-1973 were drawn from the stocks of non-metallic yarn containing cotton and from mixed qualities containing both light gauge wire and lead of cotton yarn. No samples were drawn from either metallic yarn or from yarn consisting entirely of asbestos and viscose fibre".
19. It is, therefore, seen that there had been no specific complaint even in this reply (sent long subsequent to the show cause notice) that the sampling was not properly done and the samples drawn would, therefore, be representative of the particular lots only from which samples were drawn and not the full range of production. We may also further note that when the department had specifically sought particulars from the appellants regarding the composition of the yarn or the method of manufacture, the appellants refused to give such particulars on the ground that it was a trade secret and such details could not be furnished. Nor is it the case of the appellants that there had been any change in their manner of production from time to time, and, therefore, the samples drawn would be representative of the production that was in progress on 15-2-1973 and not a representative sample of the entire range of production. In this connection Shri Narasimhan relied on certain authorities as supporting his contention. They are -
(1) New Era Hindustan Woollen Mills (1978 ELT 661 A) (2) National Textiles Corporation Ltd. (1982 ELT 639) (3) Aggarwal Metal Works, (1982 ELT 689) (4) In Re: Howrah Enterprises. (1982. ELT 807) and (5) Madhu Wool Spinning Mills (1983 ELT 2200).
The first three are decisions of the Government of India, the fourth that of the Central Board of Excise and Customs and the last that of the Bombay High Court.
20. In the case of New Era Hindustan Woollen Mills it had been held that no samples having been drawn in regular intervals the result of the test of samples drawn on a particular day could not be applied to clearances in the subsequent months. In the case of National Textiles Corporation Ltd., the Government had held that the result of a test report could have only prospective effect and not retrospective effect, more so when it was open to the petitioners to draw samples or ask for drawal of samples and offer them for test subsequently. In the case of Aggarwal Hotel Works, the Government took note of the contention that the assessee had disputed the representative character of the samples even before the test result was received and in the said circumstances dropped the review proceedings that had been initiated. In the case of Howrah Enterprises, the Central Board of Excise and Customs observed that the result of the test of the sample drawn could have been applied in respect of belting of the same lot from which sample was drawn, and that the result could not be adopted for further clearances of belting of the same type only if there was a practice of drawing prospectively until the next sample was drawn but there was no such practice in existence. In the case of Madhu Wool Spinning Mills the test was with reference to certain bales of rags imported. The High Court observed that the test report of samples drawn from one bale could not be straightaway applied with reference to all the remaining bales.
21. In the present instance it may be seen that there is no claim on the part of the appellants that their production varied from time to time with reference to the constituents in the yarn manufactured. Nor had they protested against the representative character of the sample either at the time of drawal of the sample or even subsequently. Nor had they requested for fresh drawal of samples periodically pending resolution of the dispute. In the circumstances the observations in the first four of the cases abovesaid, restricting the applicability of the test report to the lots from which sample had been drawn would not be applicable to the facts of the present case.
So far as the Bombay High Court's decision is concerned, that dealt with importation of woollen rags in bales and since the contents of different bales' would not have formed part of the manufacture from a single manufacturer, the test result of sample drawn from one bale would necessarily not be applicable with reference to the contents of the other bales. We are, therefore, satisfied that the reliance on the part of the appellants OR the observations in the above cited decisions is not correct. As already seen, when the department was, in fact, anxious to obtain infprmation regarding the nature of production of the asbestos yarn the appellants pointedly refused to give any. sucb information. In the circumstances we hold that the department was justified in seeking to-apply the result of the test of samples drawn with reference to the production' over the entire period for which the demands were raised.
22. The further contention of Shri Narasimhan is that immediately on receipt of the result of the test results the appellants applied for re-test as they were not satisfied with the results disclosed by the Chemical Examiner, but that the department failed to comply with such a request and for this reason itself further proceedings were vitiated. There is no denial that the appellants did make such "a demand under their letter dated 24-11-1973 There is no denial that the Collector did not concede this request and there was, therefore, no re-test done. The submission of Shri Sachar in this connection, is that as Rule 56 stood in 1973, there was no provision therein for ordering a re-test at the request of the asse-ssee, and therefore, when no re-test was done there was no infraction of any mandatory requirements. He points out that Rule 56 was amended in 1974 only when a provision for re-test at the request of the party was introduced.
23. On the other hand, Shri Narasimhan "submits that asking for a re-test was a natural right available to the assessee and that if such a request is made but denied, that would amount to violation of principles of natural justice. In this connection, he relies upon a decision of the Madras High Court in the case of Smt. P. Seenakamalam (Writ petition No. 1598 of 1969). It may be noted that this judgment was rendered on 20th. March, 1972 i.e. long prior to the- amendment of Rule 56 in 1974. (Shri Narasimhan has made available a copy of the judgment as extracted from the. departmental compilation of Central Excise Cases - 1972). The High Court had observed as follows:-
"It is not in dispute that the procedure for taking samples by the department is that three separate samples of the requisite quantity are to be taken, bottled, corked and sealed, and one bottle to be handed over to the party, another retained by the Department and the third sent up for chemical analysis. The taking of three samples is to ensure that if the test of one sample sent to Chemical Examiner is found to be' defective or improper either the party or the Department, as the case may be, may send the sample remaining with either, for a re-test".
It may be noted that in the present case also the sampling was done in triplicate. On the basis of the Madras High Court Judgment abovenoted and the method of sampling it has to be held that even though a right to ask for re-test was not then built into the rule itself it was a natural right available to the party. Hence the denial of that right to the appellants' was not proper.
24. But then the next question to be considered would be whether the denial of that right has. resulted in prejudice to the appellants and thus vitiated the adjudication. The re-test was asked for by their letter dated 24-11-1976 in which they had claimed:
"At the outset we beg to point out that we are not satisfied with the Chemical Examiner's report because it is not specific and does not indicate the nature of viscose and cotton whether in fibrous form or yarn is added by us in the manufacture of asbestos yarn. We, therefore, request you to get the sample retested".
Thus the retest was asked only to determine whether the cotton was' in the form of fibre or yarn in the manufactured yarn. We have already found that even if it was onty duty paid cottorf yara that was used by the appellants the duty liability on the asbestos yarn is yet established. Hence in the circumstances of this case we hold that the denial of the right of retest has not vitiated the adjudication as it has not prejudiced the rights of the appellants.
25. Shri Narasimhan contends that the show cause notice had proceeded on an entirely erroneous basis in quantifying the demand for duty and this itself would vitiate the enquiry. He points out that the quantification was on the basis that the brakelinings contained 46% of asbestos yarn/belting and the quantity of yarn was calculated on that percentage of the quantity of the brakelinings manufactured. The appellants claim that this percentage was wholly incorrect. The answer of Shri Sachar is that there had been no such denial either in the reply to the show cause notice or the appeal to the Board or even in the revision to the Government and hence the present claim is baseless. Shri Narasimhan's answer is that this error was discovered only when the department filed their paper book in the proceedings before us and that till then the appellants bona fide believed that the department had arrived at the percentage on proper investigation. As seen from the offence report following the visit on 15-2-1973 the percentage had been arrived at on the basis of calculations mentioned in Annexure-A of that offence report of resins case against the appellants. This case related to moulded brakelinings and not woven brakelinings involved in the present dispute. The moulded brakelinings utilised asbestos fibre direct and no cotton either in fibre or yarn form. In the Annexure-A above referred to the resin content had been mentioned at 54%. It is on that basis that the balance of 46% has been mentioned in the show cause notice in the present case as that of asbestos yarn. Hence there can be no doubt that the said percentage was wholly incorrect. In these circumstances the argument in this regard that, in the absence of such denial in the earlier stages they cannot be urged to raise such a plea now or that the appellants must be held to have rightly admitted the percentage, cannot be correct.
26. Another criticism in this connection is that in the show cause notice the quantum of duty evaded was calculated on the basis of production of moulded as well as woven brakelinings. The Collector himself had realised this error and had purported to suitably modify the figures in his order. But the contention of 5hri Narasimhan in this connection is that the appellants were not informed of this change before the Collector passed his order and that they had no opportunity to contest these figures. This criticism is also justified.
27. Even with regard to the 46% mentioned above, Shri Narasimhan points out that this percentage was not on weight basis, but on cost basis. This is seen from the above noted Annexure-A itself. Hence when the Collector applied this 46% to the weight of the material (as noted in the production account) there was an apparent error in the said quantification. It is thus seen that as far as the quantification of duty is concerned, the order of the Collector dated 29-6-1978 was in serious error. The Appellate order of the Board is also equally erroneous as it had affirmed the wrong quantification by the Collector in the matter of duty demand.
28. It would be convenient if at this stage the arguments with reference to the show cause notice relating to appeal 2173 of 1983 are considered. In this notice also the same incorrect percentage of 46% has been adopted to work out the duty quantification and thus the same is in apparent error. Further, in the order of the Collector dated 1-7-1983 in this adjudication he had relied upon the test report of the samples drawn on 2-11-1973 and 5-12-1975. So far as the report of the samples drawn on 2-11-1973 is concerned, the appellants has been asking for a copy of the same even in 1976 and 1977 for sending their reply in the earlier adjudication. The department had under letter dated 5-2-1977 granted permission for inspection. But on inspection the appellants appear to have been shown the report of the test of sample drawn on 15-2-1973 and had reported so by letter dated 15-2-1977, Then by letter dated 15-7-77, the department stated that the document was not available in the Office of the Assistant Collector. Later under letter dated 1-11-1977 the department had taken the stand that since that report was not a document replied upon by the department in that adjudication the appellants were not entitled for inspection thereof. The appellants claim that this report of the test of sample drawn on 2-11-1973 was never made available to them. The Collector in his order dated 1-7-1983 held this complaint to be baseless and has made reference to this report and relied on the same. Subsequently, the appellants applied to this Tribunal to send for the report amongst other documents. The same was ordered by order dated 30-10-1985. Thereupon an affidavit of the Deputy Collector (Technical) of Central Excise, Kanpur was filed that no test had been carried out of the sample drawn on 2-11-1973 and that the reference to this in the order of the Collector may be read as to the report of the test of sample drawn on 15-2-1973. Subsequently, an application was filed to so amend the order of the Collector. That prayer was rejected as this question could be considered in hearing the appeal only. Hence the reference to this test report in the Order of the Collector and his reliance on the same was patently erroneous. We may incidentally note that under the same application the department wanted to file a test report of a sample drawn on 7-1-1974 and that prayer was rejected since no reference had been made to any such report in the adjudication and there was not even an acknowledgement for service of the copy Of any such report on the appellants at any time. We may note that the Collector relied solely on the report of the samples drawn on 2-11-1973 in corning to a conclusion that it was correctly representative of the production from October 1973 to March, 1973. When it is now admitted that there was no such report as no such sample was tested the entire conclusion of the Collector fails on that ground itself.
29. Shri Narasimhan finally contended that in both cases the demands were barred by limitation. He mentioned that in the first show cause notice there was no allegation of suppression. But this may not be correct when it is seen that the entire notice was on the basis that the appellants manufactured and captively consumed the excisable commodity (asbestos yarn) without observing the excise formalities and without obtaining the necessary license therefor. The notice is dated 20-12-1973 and the period is April, 1972 to March, 1973. As the fact has been established that the yarn so manufactured was excisable under TI 18E but that the manufacture and removal was without intimation to the authorities it cannot be said that the notice suffered from the defect of time bar.
30. But so far as the notice dated 25-10-1978 is concerned, it related to the period 1-11-1973 to March, 1976. But the department was aware even in 1973 about the manufacture of this yarn by the appellants. Hence this notice is necessarily barred by time. Shri Sachar contends that under Rule 10 which was in force on 25-10-1978 there was no question of time bar. Shri Narasimhan points out that this Rule 10- came into effect on 6-8-1977 but that even before that date the demand for the period in question had become barred under the rules as were then in force and so Rule 10 which came into force on 6-8-1977 cannot revive such a barred demand. We agree that it would be so.
31. The result of the above discussion may now be summarised as follows:-
"The first show cause notice proceeded on a wrong basis with reference to the percentage of the yarn in the final product as well as the quantum of production. In the order of the Collector dated 29-6-78, the mistake regarding the percentage of yarn was maintained. Though a correction was made about the quantum of production in that order this had been done without giving an opportunity to the appellants, to challenge the same. In any event, as the quantification of duty was based on the incorrect percentage of the yarn in the final product, the duty demand cannot be supported. In the absence of proper determination of the quantum of duty demand the quantification of the penalty (even as reduced by the Board) cannot be supported. In respect of the second it has been seen that the order of the Collector is wholly based on a test report even the existence of which is now denied by the department. Further the entire demand is barred by time.
32. We are, therefore, of opinion that the impugned orders cannot be supported. On the question i whether at any rate so far as appeal No. 816/80 is concerned whether a de novo adjudication by the Collector should be ordered, we have bestowed our careful attention. We are of opinion that such a course also may not be necessary for the following reasons. The show cause notice proceeded on the basis of a percentage of the asbestos yarn in the finally manufactured product and that percentage has now been found to be defective. There appears to be no other material available such as report on chemical test of the woven brakelinings from which this percentage could be worked out. Therefore the proper duty that may be payable on the asbestos yarn cannot be quantified in the absence of this information. Hence even if a de novo adjudication is ordered, which will have to be preceded by an amendment to the earlier show cause notice, there will be no material on which the duty demand could be quantified in such an amendment also. It is in these circumstances that we are of opinion that no de novo adjudication is called for, especially after a lapse of this length of time. Another circumstance which is also to be kept in mind in this connection is that with reference to this adjudication also the appellants had been demanding a copy of the test report of the sample drawn on 15-11-1973. For the reasons mentioned earlier no such test report is available even now with the department. Therefore, in the absence of that test report also no proper adjudication would be possible.
33. In the above circumstances, we allow both these appeals and set aside the impugned orders.