1988 (4) TMI 193 - AT - Central Excise

Summary

Issues:
Interpretation of Notification No. 141/72 regarding samples of tyres drawn for test within the factory, Compliance with condition (i) of the Notification, Allegations of irregular exemption availed by the appellants, Imposition of penalty by Assistant Collector, Appeal against Assistant Collector's order, Interpretation of the words "at any one time" in the Notification, Allegations of suppression by the appellants, Validity of classification list submitted by the appellants, Interpretation of legislative intent behind the Notification, Compliance with the provisions of the Notification, Period of limitation for demand raised by the Revenue, Allegations of misuse of concession granted by the Notification.

Detailed Analysis:
The judgment by the Appellate Tribunal CEGAT, New Delhi involved a dispute regarding the interpretation of Notification No. 141/72 concerning samples of tyres drawn for test within the factory. The issue revolved around whether the samples drawn by the appellants were covered by the notification. The Assistant Collector held that the appellants had irregularly availed exemption on quantities of tyres cleared, leading to a demand for duty and imposition of a penalty. The Collector (Appeals) upheld the Assistant Collector's order, citing non-compliance with the notification's conditions and lack of a classification list. The appeal was filed challenging these decisions.

The appellants argued that the words "at any one time" in the notification did not mean "on any one day" as assumed by the authorities. They contended that drawing samples on separate shipping orders should not be considered as drawn "at any one time." The appellants emphasized that all samples were taken for testing purposes to maintain tyre quality. They also presented an approved classification list to support their claim. The appellant highlighted that the demand raised was mostly barred by limitation, and there was no allegation of suppression in the show cause notice.

The Respondent countered, stating that multiple samples of the same tyre variety were taken for testing on the same day, which was against the notification's provisions. They argued that the legislative intent was to allow only bona fide samples and not multiple samples in a day. The Respondent also questioned the validity of the classification list submitted by the appellants and argued that the assessments were provisional due to pending court cases.

After considering the arguments, the Tribunal analyzed the language of the notification and held that the appellants correctly availed the benefit by drawing only one tyre under a specific shipping order. The Tribunal rejected the Department's interpretation that the samples should be limited to one tyre per day, as there was no legislative intent or evidence supporting such a restriction. The Tribunal found no misuse of the concession granted by the notification and allowed the appeal in favor of the appellants.

In conclusion, the Tribunal ruled in favor of the appellants, emphasizing that the language of the notification did not restrict the number of samples to one tyre per day. The Tribunal found no evidence of misuse or non-compliance by the appellants and allowed the appeal, overturning the previous orders demanding duty and imposing a penalty.