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2. In the impugned order, the adjudicating Commissioner has held the impugned goods to be non-alloy steel. He has confiscated the goods and has allowed the same to be taken back on payment of a redemption fine of Rs.45 lakhs. He has imposed penalties of Rs.12 lakhs and Rs.5 lakhs on the appellant-company under Sections 114 and 114A of the Customs Act, 1962. He has also imposed penalties of Rs.5 lakhs and Rs.3 lakhs respectively under the said sections against the appellant-Managing Director. As the results of the NML test reports were not very clear, particularly with reference to the error margin, when the mater was heard on 8.9.2011, the Bench had directed the concerned scientist of NML to be present at the time of next hearing. He was accordingly present at the time of next hearing on 2.2.2012.

6. We have considered the submissions made by both sides in detail as also the case records and the clarification given by the concerned Scientist from NML at the time of hearing of the case. We find that as per the second test conducted by NML on 27.5.2010, 31 samples showed boron content less than 0.0008% whereas 42 samples showed boron content as 0.0008% or more, the highest being 0.0014%. The Scientist from NML clarified that the testing method gives rise to uncertainty to the extent of 1 0.0006%. We find that the 31 samples which were tested to be below 0.0008% were in the range of 0.0003% to 0.0007%. By applying uncertainty on the positive side, i.e. by adding 0.0006% to the test result, it is seen that all these 31 samples would also go above 0.0008%. It is well settled that when the error margin or tolerance limit is applied and the resultant value conforms to the declared value, no case can be held to have been proved against the assessee. The decision of the Tribunal in the case of New Shorrock Mills (supra) allowed the appeal of the assessee on this score.

7. What is surprising in this case is that the concerned Scientist from NML has indicated an error margin which is as high as 200%. For example, in respect of sample from Heat No.607B, boron content has been indicated by NML on the second test as 0.0003%. An error margin to the extent of 0.0006% on the positive side takes it up to 0.0009% which is 200% more than the tested value of 0.0003%. Normally, the tolerance limits (error margin) are within 1-5%. In the cited decision, in New Shorrock Mills (supra), the tolerance limit was 2.5% and 3%. It is a pity that the Board has directed the field officials to apply the borrowed definition of alloy steel from the Import Schedule of the Customs Tariff for the purpose of applying export duty in its letter dt. 3.6.2008, but has not made arrangements for proper testing of boron content as is glaringly observed in this case. A test method giving results which are uncertain to the extent of 200% is of no value for the purpose of tariff determination.

10. There was a suggestion by ld. SDR that the negative error margin would take some of the samples below the tariff breakpoint, but obviously the negative error margins cannot be used just to prove the departments case. Only when, after applying the positive error margins, the value remains below the tariff breakpoint, can a case of misdeclaration be said to have been proven against the appellants, which is not the case here.

11. Coming to the other circumstantial evidence canvassed by the ld. SDR, first of all, we note that when the impugned goods have undergone chemical test, that becomes the primary determinative factor to adjudge existence of misdeclaration or otherwise. As seen above, it cannot be concluded against the appellants on the basis of test results that they have misdeclared the impugned goods. Under the circumstances, the other evidence sought to be relied upon by the department have little value.