Customs, Excise and Gold Tribunal - Tamil Nadu
Ramnarayan Mills Ltd. vs Collector Of Central Excise on 1 January, 1991
Equivalent citations: 1991ECR239(TRI.-CHENNAI), 1991(56)ELT477(TRI-CHENNAI)
ORDER
V.P. Gulati Member (T)
1. These four appeals involve a common issue and have, therefore, been taken up together for disposal.
2. In all these cases samples of yarn were drawn by the Central Excise authorities and on test by the Chemical Examiner these were found to be of a count higher than that was declared and the duty was, therefore, demanded from the appellants based on the counts ascertained.
3. The learned Advocate for the appellants first dealt with appeal in the case of Ramnarayan Mills Ltd. (A. No. E/523/88/MAS) and pleaded that the appellants had challenged the methodology adopted for drawing of samples before the learned lower authority and stated that the Central Excise authorities had prescribed the method vide Trade Notice issued in 1988. He, however, conceded that the period of time in the case involved was prior to this date of issue of this Trade Notice and could not state as to how this Trade Notice issued in 1988 could be relevant for the purpose of proceedings drawn earlier to that period and in any case he could not point out as to in what way the sample drawn was not representative in nature and what should have been done by the authorities at the relevant time and what was desired to be done and was not done in regard to that. He, however, maintained that the methodology adopted was defective. He also pleaded that there was denial of principles of natural justice inasmuch as a personal hearing was not given by the learned Collector (Appeals). It was pointed out to the learned Advocate that the learned lower appellate authority in his order has recorded that the appellants did not appear for personal hearing and has given his reasons for not allowing the adjournment of 30 days as sought for. The learned Advocate also could not show as to the ground on which the adjournment was sought for and he had no papers to file to establish that the plea for adjournment was made on valid grounds. He further pleaded that in any case the demand should be restricted only to the lot from which the samples were drawn and not for the periods subsequent to the date of drawal of the samples. He pleaded that samples were drawn on 25-10-1986 and the demand has been raised for the period 25-10-1986 to 10-12-1986 i.e. till the date when the next sample was drawn. He pleaded at the maximum the demand could be raised only in respect of the stock lying on that date and future production could not be taken into reckoning for the purpose. He also pleaded that on the count as ascertained no tolerance was allowed by the lower authorities while reckoning the demand in the case of Narayan Krishna Spinners (P) Ltd. (Appeal No. E/515/89/MAS). He pleaded that the samples were drawn by the authorities on 18-12-1986 and 4 of the samples drawn were found to be in order and only in respect of two samples the count was found to be higher - yarn of 45s. were found to be of 48.7 count and yarn of 55s were found to be of 57.8 count and that on a re-test these counts were found to be 49.3s and 57, is respectively. He generally reiterated the above pleas made in the case of appeal by M/s. Sri Ramakrishna Mills as above. Further pleading in the case of Sri Ramakrishna Mills, who are appellants in Appeal No. 786/89, he pleaded that the samples were drawn on 11-12-1986 and the demand has been made for the period 10-12-1986 to 11-3-1987 and he reiterated the pleas made earlier in the other two cases above. Likewise, in the case of Sri Ramakrishna Mills in Appeal No. 786/89 he pleaded that the samples were drawn on 11-3-1987 and demand has been made for the period 11-3-1987 to 19-5-1987. He reiterated the pleas made earlier.
4. The learned SDR for the Department pleaded that the appellants did not raise any objection to the method of sampling when the samples were drawn and had made this plea only after the test results had been obtained. He pleaded that the test results clearly show that the appellants had declared the count of the yarn less than the actual count and this stood confirmed by the re-test done at the behest of the appellants by the Chief Chemist. He also pleaded that it has not been shown -is to how the methodology adopted for drawing the samples was wrong or defective. In regard to the appellants' plea for restricting the demand to the stock in hand of the production of the same day and in regard to the tolerance he has no specific plea to make and he was asked to file copy of the Trade Notice, if any, issued in regard to the tolerance being allowed by the Department.
5. We observe that in all these cases the samples were drawn and on test in the Departmental laboratory the count of the yarn was found to be higher than that declared by the appellants. The samples were also re-tested and the demands have been made based on the test results on re-test by the Chief Chemist of the Departmental laboratory. It is observed that the appellants admittedly did not raise any objection to the methodology adopted for the drawal of the samples and it was only after on re-test the results went against them they raised the point regarding defective method of drawal of samples. Neither before the lower authorities nor before us the appellants have been able to show as to in what way the drawal of samples was defective and what should have been the methodology that should have been adopted. The learned Advocate has merely mentioned that the samples were not drawn in terms of the Trade Notice issued in 1988. But, however, the fact remains that the method as set out in the 1988 Trade Notice could not have been adopted in the year 1986 when the samples were drawn from the Mills. The learned Advocate has not shown and established how the method of sampling earlier adopted was defective to the extent that the results obtained by that method of sampling would not be correct. In view of this we hold that this plea of the appellants has no force. The next plea of the appellants is that some tolerance should have been allowed in respect of the ascertained count and after allowing for the tolerance only the demand should have been raised based on the count arrived at after tolerance allowance. He, however, did not make any specific plea as to the extent of tolerance that should have been allowed or was being allowed by the Departmental authorities. We observe that as it is in the nature of things a margin of error is built in when any scientific determination is done in the measurement etc. and this margin of error varies from commodity to commodity and the methodology of the test adopted and the instruments used for that purpose. As it is we observe that on re-test by the Chief Chemist the counts of yarn in some cases have been found to be at variance with the counts as determined by the Chemical Examiner. This itself shows that there is a built-in margin of error. We, therefore, find that there is force in the appellants' plea that some tolerance has to be allowed before the final count is arrived at for the purpose of raising the demand. The Departmental Representative was asked to file copy of the Trade Notice, if any, issued in this regard. None has been produced before us till date. We, therefore, direct the authorities to work out the count of the yarn after allowing for tolerance limit as applicable in such cases as a matter of practice either by the Departmental authorities or is shown to be in the standard books or as is accepted in the Trade for the purpose. Adverting to the appellants' plea that the demand should not have been made for the period subsequent to the drawal of the samples till the next sample was drawn, we observe that the appellants' plea has to be accepted. It is observed that in case the yarn declared by the appellants in respect of a particular lot manufactured or production for the particular day is wrong it does not necessarily follow for all the subsequent periods till next sample was drawn, the count of the yarn would not be as declared by the appellants. Before raising the demand for subsequent period the authorities must bring on record the evidence subsequent to that period that the appellants had produced yarn of a count greater than what was declared. The authorities should have done investigation with reference to the records in the factory as also by collecting evidence in regard to the sales and also from the person in-charge of production in the factory. Unless any positive evidence in this regard is brought on record the demand for periods subsequent to the drawal of samples cannot be held to be maintainable. We, therefore, hold that the demand made has to be restricted to lots which were found in stock on a particular day and the yarn produced on that day. With the above observation, we partially allow the appellants' appeals in the above terms.