1996 (3) TMI 217 - AT - Central Excise

Summary

Issues:

1. Classification under Notification No. 34/84 for textile material.
2. Allowance of tolerance limit in blend composition for textile material.
3. Binding nature of administrative directions on quasi-judicial authorities.

Analysis:

1. The appellants filed a classification list claiming exemption under Notification No. 34/84 for their textile material with a composition of 58% cotton and 42% polyester. However, upon testing, the sample was found to contain 60.79% cotton and 39.20% polyester. The Assistant Collector initially issued a demand notice but later withdrew it after allowing a tolerance limit of 1% polyester fiber. On appeal by Revenue, the Collector of Central Excise (Appeals) set aside the Assistant Collector's decision, stating that administrative orders like the Board's letter from 1977 cannot bind quasi-judicial authorities.

2. The appellant's representative argued that the Central Board of Excise and Customs had previously allowed a tolerance of 2.5% in textile materials back in 1977, citing the ISI standard of +3% tolerance in blend composition for textile material. The representative contended that such tolerance was necessary due to inherent variances in chemical tests and scientific determinations. Referring to previous tribunal decisions and the case law, it was highlighted that a margin of error is inevitable in tests, and some tolerance must be permitted before raising a demand. The Tribunal's earlier decision in a similar case supported the allowance of tolerance, emphasizing the importance of recognizing industry standards and trade practices.

3. The Department's representative reiterated that the tolerance limit was not explicitly included in the exemption Notification, and therefore, the Collector (Appeals) was correct in disallowing the tolerance. It was emphasized that quasi-judicial authorities are not bound by administrative directions. However, the Tribunal, after considering the arguments from both sides, noted that the Notification partially exempts fabrics containing more than 40% polyester fiber. Despite the discrepancy between the declared and tested composition, the Tribunal recognized industry standards and practices, such as the ISI's prescribed tolerance limit, and the Central Board of Excise and Customs' acceptance of tolerance in similar cases. The Tribunal concluded that a margin of error is inherent in scientific determinations, and based on precedent and industry standards, allowed the appeal and set aside the Collector (Appeals) decision.