1972 (3) TMI 34 - HC - Central Excise

Summary

Issues: Refusal to refund additional excise duty based on test reports; Ignoring part of the Chief Chemist's report; Discrepancy in yarn count analysis; Interpretation of tolerance limits; Petitioners' conduct in selling yarn below 51 NF counts.

Analysis:
The petitioners, yarn manufacturers, contested the imposition of additional excise duty by the Department based on test reports indicating yarn counts above 51 NF. The Department relied on samples taken and analyzed, showing counts exceeding 51 NF, leading to a demand for higher excise duty. However, the petitioners argued that one sample revealed a count of 49.4 NF, consistent with their own analysis, and sold yarn below 51 NF counts accordingly. They contended that their selling behavior aligned with the yarn quality they produced, indicating a discrepancy in the Department's assessment. The petitioners sought a refund of the additional excise duty, challenging the Department's decision to ignore the sample with a count below 51 NF, as it aligned with their own analysis. The Court acknowledged the discrepancy in the test reports and the petitioners' selling behavior, emphasizing that selling at a lower price and collecting excise duty at a lower rate indicated the yarn produced was below 51 NF counts, contrary to the Department's findings. The Court noted the importance of the sample showing a count of 49.4 NF and the petitioners' consistent conduct in selling yarn below 51 NF counts, leading to the conclusion that the petitioners were entitled to the refund claimed. Consequently, the Court allowed the Writ Petition, quashing the order of the respondent without imposing any costs.