1991 (4) TMI 256 - AT - Central Excise

Summary

Issues: Appeal against demand for differential duty under Section 11A of the Central Excises & Salt Act, 1944; Question of time-bar in initiating proceedings.

Analysis:
1. The appeal was made against the order of the Collector confirming a demand for differential duty under Section 11A of the Central Excises & Salt Act, 1944. The appellant did not dispute the classification or rate of duty but focused on the question of time-bar. The dispute arose from the misdeclaration of fibre content in blended yarn, specifically in sort No. 8744 of fabrics.

2. The appellant argued that there was no conscious knowledge or intention to evade duty, as acknowledged by the Collector who did not impose a penalty. The appellant maintained that the declaration of cotton content as 34% was accurate, despite discrepancies in test results. Technical aspects were raised to support the argument that variations in fibre content are expected due to processing methods.

3. Expert opinions were presented to support the appellant's contention that variations in fibre content are common and fall within acceptable limits. The appellant emphasized that the Department failed to follow procedures for drawing samples of blended yarn regularly, as required by departmental instructions. The appellant also highlighted the technical complexities involved in accurately determining fibre composition in blended yarn.

4. On the other hand, the Department argued that the test results on grey fabrics showed a lower cotton fibre content than declared. The Department contended that the misdeclaration, even if unintentional, justified the demand for an extended period. The Department relied on the discrepancy between declared and tested cotton content to support its position.

5. The Tribunal considered the arguments from both sides and noted that no sample of blended yarn was chemically tested. It was established that variations in fibre composition are expected during testing, and allowances for such variations are provided in technical standards and departmental instructions. The Tribunal concluded that the appellant's declaration was made in good faith, considering the technical complexities involved.

6. Ultimately, the Tribunal ruled in favor of the appellant, allowing the appeal on the grounds that the demand was time-barred. The Tribunal criticized the Department for not following proper procedures in drawing samples and emphasized that the appellant's declaration, even if slightly inaccurate, did not amount to willful misdeclaration to evade duty. The decision to set aside the demand was based on the lack of evidence of intentional evasion and procedural lapses by the Department.