1991 (1) TMI 254 - AT - Central Excise

Summary

Issues:
1. Application of tolerance in test results for classification of goods.
2. Liability of respondents to pay duty based on the classification of goods.
3. Time limitation for issuing demand notice.
4. Allegation of deliberate mis-statement of fabric composition to evade duty.

Analysis:
1. The case revolves around the application of tolerance in test results to determine the classification of goods. The respondents declared a quantity of shirting cloth as man-made fabrics, but upon testing, it was found to have a composition of 51.3% wool fibers and 48.7% non-cellulosic fibers. The Assistant Collector classified it as woollen fabric and demanded differential duty. However, the respondents claimed tolerance under a circular allowing 2.5% tolerance in mixed fabrics, which the lower authority did not extend. The Tribunal noted that test results may not always be accurate, and the tolerance factor should be applied in favor of the assessee, as per the circular guidelines.

2. The appellant argued that even after allowing the tolerance, wool remained the predominant fiber in the fabric. The Tribunal analyzed the composition based on the tolerance factor and concluded that the correct composition of the fabric favored the respondents. The appellant alleged that the respondents deliberately misstated the fabric composition to evade duty, invoking an extended period of limitation. However, the Tribunal found no tangible evidence supporting this claim and upheld the respondents' position.

3. Regarding the time limitation for issuing a demand notice, the Tribunal observed that the notice was issued after the standard 6-month period. The Tribunal emphasized the lack of evidence of deliberate mis-declaration by the respondents to justify the extended limitation period under Section 11A of the Central Excises and Salt Act. Without such evidence, the Tribunal found the demand notice to be time-barred.

4. In conclusion, the Tribunal upheld the order in favor of the respondents, dismissing the appeal by the Collector of Central Excise, Chandigarh. The Tribunal emphasized the importance of applying tolerance in test results, the lack of evidence supporting deliberate misstatement by the respondents, and the adherence to time limitations for issuing demand notices.