2013 (11) TMI 851 - HC - Central Excise

Right to Re-testing of the Product under CBEC Excise Manual of Supplementary Instruction 2005 Held that - The right of retesting given by the statute cannot be prima facie denied on the ground that the reports obtained by the department are complete and that the department has no doubt, to its correctness - the denial of the statutory right for retesting the sample amounts to violation of principles of natural justice resulting into serious civil and criminal liability. Whenever a right is given by a Statute for retesting, the reasons for dissatisfaction of the manufacturer with the test carried out by the chemical examiner are not relevant - It is sufficient to state that the assessee is dissatisfied with the test carried out by the chemical examiner - his application to Deputy/Assistant Commissioner, Central Excise within the prescribed period of 90 days and deposit of prescribed fee is sufficient for direction to retest the samples. Where the application for retesting, comply with these conditions, it should be invariably allowed. 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 - the reasons given for denial of retesting are not relevant - The right of retesting, for which samples are specifically drawn by by the department in accordance with the instructions issued under the Central Excise Rules 2004, could not be denied, to the assesse directions issued to retestify the samples Decided in favour of Petitioner.

Summary

Issues:
Classification of rubber sheets under Central Excise Tariff Act, 1985; Denial of retesting of samples by Central Excise Department.

Analysis:
1. The judgment addresses the issue of 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 Department relied on test reports from recognized institutions to support their classification. However, the petitioner contended that the reports were vague and incomplete, lacking crucial details like the percentage of resin and chemical properties. The petitioner requested retesting of samples to prepare a proper defense, which was initially denied by the department.

2. The main focus of the judgment revolves around the denial of the petitioner's right to retest the samples under CBEC's Excise Manual of Supplementary Instruction 2005. The court emphasized the statutory right granted to the assessee for retesting within 90 days of receiving test results, upon dissatisfaction with the initial examination. The court found the reasons provided by the department for denying retesting to be irrelevant, stating that compliance with the statutory conditions should invariably lead to allowing retesting. The denial of this right was deemed a violation of natural justice and could result in serious civil and criminal liabilities for the manufacturer.

3. The court highlighted the importance of upholding statutory rights, especially in cases involving potential penalties and liabilities under the Central Excise Act. It emphasized that when a statute grants the right for retesting, the manufacturer's dissatisfaction with the initial test is sufficient grounds for retesting. The judgment concluded by allowing the writ petition, directing the Central Excise Department to retest specific samples or draw fresh ones for examination. The court also stayed the final hearing pending the retesting reports, ensuring fairness and adherence to statutory provisions.