1999 (2) TMI 253 - AT - Central Excise

Summary

Issues:
1. Whether duty payment is required for samples of ABS polymers taken before RG-I stage.
2. Validity of the show cause notice demanding duty for a specified period.
3. Justification for invoking proviso to Section 11A and the time bar on the demand.
4. Interpretation of Board's Circular dated 5-1-1987 regarding duty payment for samples.
5. Consideration of Tribunal's judgments and orders in determining duty liability.

Analysis:
1. The case involves a dispute regarding the duty payment for samples of ABS polymers taken before the RG-I stage. The appellants, as manufacturers falling under Heading 3903.30, argued that the samples were taken for quality control purposes without duty payment. They contended that the samples were either sent back for re-processing or entered in RG-I after passing the test. The Department issued a show cause notice alleging duty evasion for the period from April 1993 to August 1997, citing non-invoicing, lack of proper accounts, and failure to inform the Department.

2. The appellants argued that the Department's allegations were unfounded, emphasizing their internal record-keeping and past responses to Department queries regarding sample testing. They asserted that the duty demand was unjustified, especially considering the RG-I stage of plastic and resin falling under Chapter 39, as indicated by the Department's own materials. The appellants maintained that there was no suppression or misstatement of facts, and the demand was time-barred, questioning the invocation of Section 11A proviso.

3. The Department, however, relied on the Board's Circular dated 5-1-1987, contending that the appellants failed to maintain the prescribed register for sample accounts. The officer's order referenced the Circular, disregarding the appellants' reliance on Tribunal judgments supporting their position. Despite the officer's stance, the Tribunal found merit in the appellants' case, noting the strong arguments on both merits and time bar issues.

4. The Tribunal observed that the Department had not effectively countered the disclosure of sample testing within the factory, emphasizing the relevance of Tribunal judgments that could not be dismissed arbitrarily. The Tribunal opined that it was incumbent upon the Department to demonstrate that the RG-I stage had been crossed without duty payment intentionally evaded. Considering the totality of facts and circumstances, the Tribunal deemed the appellants' request justified and waived the pre-deposit of duty and penalty during the appeal's pendency.