1991 (5) TMI 174 - AT - Central Excise

Samples - Drawal of for test for verifying denier of nylon yarn on which rate of duty dependent

Summary

Issues:
Challenging demand of duty on nylon filament yarn under Notification 188A/62-C.E.
Validity of sample drawn for denier test.
Frequency of drawal of samples for test purposes.
Interpretation of Board's instructions on sample validity.
Applicability of test result to subsequent production.
Compliance with Central Excise Rules on sample testing and re-testing.
Acceptance of test results for levy of duty.
Claim of adherence to international standards for denier determination.
Tolerance limits under exemption notification.
Validity of appellants' denierage records.
Duration of validity of test results for levy of duty.

Analysis:
The appellants contested the duty demand on nylon filament yarn under Notification 188A/62-C.E., challenging the validity of the sample drawn for denier test. The sample was found to exceed the denier limit specified in the notification, leading to the dispute. The appellants argued that the sample was not representative and was drawn incorrectly. However, the Tribunal noted that the sample was drawn in accordance with Rule 56 of the Central Excise Rules, and the appellants did not request a re-test as allowed under the rule. As a result, their objections on the sample's validity were dismissed.

The frequency of drawal of samples for test purposes was also a point of contention. The appellants argued that the sample drawn on 30th June 1983 should not apply to production in the subsequent month as per Board's instructions. They cited a judgment from the Andhra Pradesh High Court to support their claim. However, the Departmental Representative relied on a Madras High Court judgment, emphasizing that the test result governs production until the next sample is drawn. The Tribunal upheld this principle, rejecting the appellants' argument on sample validity duration.

Regarding the interpretation of test results for levy of duty, the Tribunal emphasized that the purpose of the sample test was clearly indicated, and the denierage determined the duty rate. The appellants' plea to adhere to international standards for denier determination was dismissed, as the Central Excise authorities verify compliance with exemption notification standards, not international norms. The Tribunal also upheld the tolerance limits specified in the notification, rejecting the claim that professional body standards should apply additionally.

The appellants' denierage records were challenged, but discrepancies between their records and the test results led to the initiation of proceedings. The Tribunal noted that the Assistant Collector had correctly limited the duty demand to one month based on the sample test results. The appellants' argument against the duration of test result validity was rejected, as the test result governs production until the next sample is drawn, as per legal precedents.

In conclusion, the Tribunal upheld the Assistant Collector's decision, finding it reasonable and correct. The appeal challenging the duty demand on nylon filament yarn was rejected, affirming the validity of the sample test results and the compliance with Central Excise Rules and exemption notification standards.