1999 (11) TMI 483 - AT - Central Excise

Summary

Issues Involved:
1. Thickness of glass.
2. Quantity of glass taken for computing duty.
3. Limitation.

Issue-wise Detailed Analysis:

1. Thickness of Glass:
The case primarily revolved around the discrepancy in the declared and actual thickness of the glass. The appellants were accused of clearing figured and sheet glasses of higher thickness after paying duty at lower thickness. The Central Excise officers seized several crates of glass from various locations, finding that the actual thickness was significantly higher than the declared 2.2 mm. The appellants argued that glass does not have uniform thickness and that the department's method of using the Machine Performance Report for determining thickness was incorrect. They also contended that the thickness should be measured at the time of packing and not based on theoretical reports. The Tribunal noted that from 1-3-1982, duty was based on both value and thickness, with thinner glass attracting less duty. They found that the appellants' declared thickness was consistently lower than the actual measurements, and thus, the department's assessment was justified. The Tribunal also referenced Trade Notice No. 21/85, which allowed certain tolerances, but concluded that the appellants' declared thickness was still significantly lower than the actual thickness.

2. Quantity of Glass Taken for Computing Duty:
The appellants contended that the Machine Performance Reports used by the department to calculate the quantity of glass were theoretical and did not account for breakages and damages, which are common with fragile items like glass. They argued that the actual production should consider these losses. However, the department relied on the statement of the appellants' glass technologist, who confirmed that the Machine Performance Reports recorded the actual production of glass. The Tribunal accepted the department's stance, noting that the reports were prepared and signed by the glass technologist and thus represented the actual figures of glass produced. Consequently, the figures from the Machine Performance Reports were deemed correct for computing the quantity of glass manufactured.

3. Limitation:
The appellants argued that the demand was time-barred, as the SCN was issued on 20-2-1984 for the period 1-3-1982 to 31-8-1983. They claimed that their Classification List (CL) was approved, and any discrepancy should have been addressed by the department earlier. The department countered that the appellants' declaration in the CL was vague, particularly regarding the thickness, which was intended to evade duty. The Tribunal noted that the appellants' declaration was not specific and lacked details on the various thicknesses of the glass cleared. However, they referred to the Hon'ble Supreme Court's decision in Cotspun Limited, which stated that excise duty based on an approved classification list is correct until challenged by a show cause notice. The Supreme Court held that differential duty cannot be recovered on the grounds of short levy if based on an approved classification list. Applying this principle, the Tribunal concluded that the appellants had a strong case on limitation, rendering the demand time-barred.

Conclusion:
The Tribunal found that the appellants had been able to make a case in their favor on the issue of limitation, thus allowing the appeal and setting aside the impugned order. The entire case was based on the correct interpretation and application of legal principles concerning the thickness of glass, the method of computing quantity, and the limitation period for issuing a show cause notice.