Customs, Excise and Gold Tribunal - Delhi
National Organic Chemical Industries ... vs C.C.E. on 13 January, 1997
Equivalent citations: 1997(92)ELT629(TRI-DEL)
ORDER Shiben K. Dhar, Member (T)
1. This appeal is directed against the Order-in-Original dated 16-1-1991 of Additional Collector of Central Excise, Bombay.
2. The appellants cleared PVC Compound WL-80B Grade claiming exemption under Notification No. 132/86 as amended by Notification No. 418/86-CE., dated 17-9-1986. This Notification exempts PVC Compounds having specific gravity of the product less than 1.28 from the whole of the Central Excise duty. On test by Deputy Chief Chemist, Custom House however found the samples had specific gravity of more than 1.28. Show cause notice, therefore, was issued to the appellants demanding differential duty. The Collector confirmed the demand of duty and ordered them to pay the amount of Rs. 1,41,456/-. He also imposed a penalty of Rs. 20,000/-.
3. Arguing for the appellants, the Learned Consultant submits that soon after the receipt of test results on 9-4-1987 they wrote to the Supdt. vide their letter dated 20th May, 1987 pointing out that there appeared an error in the test done by the Customs House laboratory and they would be discussing this matter with the Deputy Chief Chemist. They also discussed the matter with him and he had agreed to issue a revised report. All these facts were stated to the Assistant Collector but no cognisance was taken by him. Their own test reports throughout indicate the specific gravity only as 1.26 which is supported by the test report of Bombay University. Apart from this since their test results throughout had indicated specific gravity of 1.26 they had declared bonafide and they cannot be charged with having made any deliberate mis-statement. Though the test result was received on 9-4-1987 show cause notice was issued only on 10-10-1988 for the period September, 1986 to November, 1986. Pleading that the entire demand is time barred, he cites the case of Unique Pharmaceuticals Laboratory v. Collector of Central Excise, as reported in 1990 (46) E.L.T. 485, Collector of Central Excise, v. Chemphar Drugs & Liniments, as reported in 1989 (40) E.L.T. 276 and G.M. Laminates Pvt. Ltd. v. Collector of Central Excise, as reported in 1996 (87) E.L.T. 197.
4. The learned DR submits that they made deliberate mis-statement and in fact did not ask for re-test when the rules clearly provide for re-testing in case they do not agree with the test conducted by the Deputy Chief Chemist. Their failure to opt for re-test would imply a deliberate mis-statement with intent to evade duty.
5. We find that Deputy Chief Chemist has categorically indicated the specific gravity as 1.4015. Notification exempts PVC only if it has specific gravity of less than 1.28. In view of the categorical test results of Deputy Chief Chemist and keeping in view the fact that the appellants did not opt for re-test, the contrary test reports maintained by their own laboratory or other agencies in the absence of any reasons to shake the credibility of the Chief Chemist's testing cannot be accepted. On merits, we have to hold that the appellants are not eligible to the exemption. We however, note that they were intimated the test results on 9-4-1987 and show cause notice was issued on 10-10-1988 for the period 19-9-1986 to 11-11-1986. Our attention was specifically drawn to letter dated 20th May, 1987 addressed by the appellants to the Supdt. after receipt of test report. In this letter, we find that the appellants contested the Dy. Chief Chemist's report and felt that there was an error in regard to the specific gravity and claimed that the specific gravity of the product was 1.26. In the reply to the show cause notice placed at page 30 of the paperbook the appellants referred to this letter and further stated that they had met Dy. Chief Chemist who had agreed to reanalyse this sample and forward the revised report to the Supdt. Nothing further was done in the matter and therefore, they had presumed that revised report showing correct specific gravity as 1.26 must have been forwarded by the Dy. Chief Chemist to the Supdt. This would clearly indicate that they had contested the findings of the Dy. Chief Chemist. Our attention has also been drawn to the test results of this product over many years which consistently show the specific gravity of 1.26. All this would indicate that when they made the statement that their product had specific gravity of less than 1.28 they genuinely believed that the product in fact had such specific gravity. The test results maintained by the Laboratory over the years indicated the specific gravity. The department on the other hand has not led any evidence that statement regarding specific gravity made by them was made with intent to evade duty. To attract larger period what is relevant is whether there has been a wilful mis-statement or suppression of facts with intent to evade payment of duty. When a person over the years manufactures a product having specific gravity of 1.26, and the products are sold to a specific class of buyers as contened before us by the Learned Consultant, one can reasonably presume that when he makes a statement based on past experience it can only be bonafide unless the other side leads evidence to prove malafide. No such evidence is forthcoming from the records. There has to be a positive suppression to invoke extended period, In fact when this matter came up for prima facie consideration for the grant of stay the Tribunal at that very stage observed that they were prima facie of the view that there was no wilful suppression in this matter to invoke extended period of time under Proviso to Section 11A of the Act. In view of this, while we find that the appellants have no case on merits, we allow the appeal on the limited question of time bar. Since we have held that the mis-statement was not wilful nor with intent to evade payment of duty, we also set aside the order relating to penalty.