1997 (1) TMI 198 - AT - Central Excise

Summary

Issues:
1. Exemption claim for PVC Compound WL-80B Grade under Notification No. 132/86.
2. Allegation of deliberate mis-statement and duty evasion.
3. Time-barred demand for duty payment.
4. Credibility of test results and intent to evade duty.
5. Imposition of penalty.

Exemption Claim Dispute:
The appeal was against the Order-in-Original by the Additional Collector of Central Excise, Bombay, regarding the clearance of PVC Compound WL-80B Grade claiming exemption under Notification No. 132/86. The notification exempts PVC Compounds with a specific gravity less than 1.28 from Central Excise duty. However, test results showed a specific gravity of more than 1.28, leading to a demand for differential duty and a penalty imposed by the Collector.

Allegation of Mis-Statement:
The appellants argued that they promptly contested the test results, pointing out a potential error and requesting a re-test. They maintained that their consistent test reports showed a specific gravity of 1.26, supported by the Bombay University report. The appellants claimed that the delay in issuing the show cause notice rendered the demand time-barred, citing relevant case law to support their argument.

Time-Barred Demand Issue:
The appellants contended that the demand for duty payment was time-barred, emphasizing their efforts to address the alleged error in the test results promptly. They highlighted their communication with the authorities and the lack of action taken by the Assistant Collector despite their objections and request for a re-test. The Tribunal considered the letter contesting the test results and the absence of evidence proving a deliberate mis-statement to evade duty, ultimately ruling in favor of the appellants on the time-bar issue.

Credibility of Test Results and Intent:
The Deputy Chief Chemist's test results indicated a specific gravity of 1.4015, exceeding the exemption threshold. The Tribunal noted that the appellants did not opt for a re-test as provided by the rules, leading to a conclusion that the appellants were not eligible for the exemption. However, the Tribunal acknowledged the appellants' genuine belief in their product's specific gravity based on consistent test results over the years. The absence of evidence indicating intent to evade duty led the Tribunal to reject the allegation of deliberate mis-statement.

Imposition of Penalty:
While finding against the appellants on the merits of the exemption claim, the Tribunal allowed the appeal on the time-bar issue and set aside the penalty order. The Tribunal concluded that the mis-statement was not willful and lacked intent to evade duty, leading to the decision to overturn the penalty imposed by the Collector.