2000 (10) TMI 441 - HC - Central Excise

Summary

Issues:
The issues involved in the judgment are the demand for additional duty on yarn counts exceeding prescribed limits, the relevance of tolerance limits in test results, and the period for which the additional duty can be demanded.

Demand for Additional Duty:
The respondent, a yarn manufacturer, faced a demand for duty on yarn counts exceeding prescribed limits based on test results. While the counts of 46 and 70 were prescribed, the actual counts were found to be 48.4 and 75.2, respectively. The Tribunal accepted the plea that duty should be imposed only on goods manufactured on the day of sample drawal. The Tribunal's order directed duty payment for lots sampled on 28-8-1986, not for a re-test or disregarding the initial test results.

Relevance of Tolerance Limits:
The Tribunal made observations on tolerance limits in scientific tests, stating that variations are inevitable and should be allowed for. However, the Tribunal's ultimate order was to pay duty for the lots sampled on 28-8-1986, without directing a re-test. The Tribunal's consideration of tolerance was deemed irrelevant as the assessee did not challenge the test results, and no material was presented to question the precision of the tests.

Period for Additional Duty Demand:
The demand for duty was based on the assumption that all production after the sample drawal date on 17-7-1986 consisted of yarn with excess counts. However, there was no material to support this presumption. The judgment clarified that duty can be demanded for yarn manufactured on the sample drawal date and for yarn in stock on that day if sampled. The differential duty for excess counts should not apply to the entire production period between samples, but only to the day's production when the sample was drawn. Stocks available on that day, if sampled, are also subject to the additional duty.

Conclusion:
The High Court of Madras ruled that duty should be paid for yarn counts exceeding prescribed limits based on the day's production when the sample was drawn. Tolerance limits in test results were considered irrelevant, and the demand for additional duty should be limited to the specific production day and sampled stock counts.