2013 (8) TMI 500 - HC - Central Excise

Classification of Goods - Re-testing of Goods - Revenue was of the view that the rubber sheets manufactured by the assesse were classifiable under tariff entry 40082910 - Assesse made a request for re-testing the sample - Held that - The reasons given for denial of retesting were not relevant -The right of retesting, for which samples were specifically drawn by the department - The instructions issued under the Central Excise Rules 2004 could not be denied to the assesse. The application may not be rejected on the ground that the testing was done by Government recognized independent labs, and that the test reports are clear and complete - Directions were made that samples B or C may be sent for retesting by the Central Excise Department and in case samples B & C were not available with the department for any reason, sample D , given to the manufacturer, may be sent for retesting -In case sample D was not in a condition for testing for any reason, or was not available with the manufacturer, the department may draw fresh samples from the manufacturer in the manner, which was provided for sending it for retesting Decided in favor of assesse.

Summary

Issues:
1. Classification of rubber sheets under Central Excise Tariff Act, 1985.
2. Denial of retesting of samples by the Central Excise Department.
3. Violation of principles of natural justice.

Analysis:
1. The judgment revolves around the classification of rubber sheets manufactured by the petitioner under the Central Excise Tariff Act, 1985. The petitioner's products were alleged to be classifiable under a tariff entry attracting a higher duty rate due to the presence of resin. The Central Excise officials conducted tests and relied on reports from testing institutes to support their classification. However, the petitioner disputed the clarity and completeness of these reports, requesting retesting to prepare a proper defense. The petitioner's right to retesting was denied by the department, leading to the legal challenge.

2. The denial of the petitioner's right for retesting forms a crucial issue in the judgment. The court emphasized the statutory provision allowing for retesting within 90 days of receiving test results if the assessee is dissatisfied with the initial test. The court found the reasons provided by the department for denying retesting to be irrelevant, stating that compliance with statutory conditions should invariably lead to allowing retesting. The judgment highlighted that the denial of this right could result in serious civil and criminal liability for the manufacturer, emphasizing the importance of upholding principles of natural justice.

3. The judgment underscores the significance of principles of natural justice in administrative proceedings, particularly in cases involving potential civil and criminal liabilities. The court held that when a statutory right for retesting is provided, reasons for dissatisfaction with the initial test are not relevant. The court's decision to allow the writ petition and direct the Central Excise Department to conduct retesting of samples demonstrates a commitment to ensuring fair procedures and protecting the rights of the manufacturer in compliance with statutory provisions and principles of natural justice.