9911796707
TMI Blog1986 (11) TMI 193X X X X Extracts X X X X X X X X Extracts X X X X ..... issued under Rule 10 and 10-A of the Central Excise rules. Subsequently under corrigendum dated 25-4-1978, the reference to Rule 10 was dropped from the demand confirming the demand under Rule 10-A only. After adjudication, the Assistant Collector under his order dated 5-10-1978 confirmed the demand and an appeal against the same was dismissed by the Appellate Collector by order dated 29-9-1982. This appeal is against the said order. 2. We have heard Shri K. Narasimhan, Advocate for the appellants and Shri K.C. Sachar for the department. 3. Serial No. 3(2) of the table attached to the notifications mentioned earlier read Yarn (containing not less than 60% of wool and not more than 5% of virgin wool) commonly known as shoddy . It is this description that the appellants had mentioned in their classification lists dated 6-3-1974, 27-8-1974 and 17-3-1975 in claiming benefit under the respective notifications 167 of 1973, 112 of 1974 and 30 of 1975. Shri Narasimhan further points out that following the approval of these classification lists the appellants were regularly submitting monthly returns in RT 12 forms which were regularly assessed by the Superintendent during all the mont ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... mentioned in the show cause notice). The order of the Assistant Collector makes a reference to a letter dated 21-3-1977 of the Supdt. containing the basis for the demand. No copy of the said letter has been produced before us either by the appellants or by the Department. The order of the Assistant Collector proceeded on the basis that from the records it is evident that more than 5% of virgin wool had been used in the mixture for spinning of shoddy yarn. As already stated, we are unable to discover the basis of this assertion. 5. In any event, the argument of Shri Narasimhan is that no virgin wool at all had ever been used by the appellants since they had been utilising only pulled and garnetted wool occasionally mixed with spinning waste got from other mills. It is this spinning waste that has been held by lower authorities as constituting the virgin wool portion. The Assistant Collector holds that virgin wool which has undergone the process of spinning continues to be virgin wool even though it may be claimed by the manufacturers as waste wool . The Appellate Collector held sweeping and the waste obtained from carding, combing and cleaning of virgin wool would still contain ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... re than 5% virgin wool. We would read the words to mean that a given lot of shoddy yarn to qualify for the concession should contain not less than 60% wool. But, if it contains virgin wool, the latter should not exceed 5%. That, in our view, would be the proper meaning. The words used would not indicate that the presence of virgin wool is a must. 9. Therefore, even on merits the demand for the differential duty on the basis that the yarn fell under serial 3(3) and not under serial 3(2) is without substance. 10. Shri Narasimhan further contends that in any event the demand was barred by time and could not be enforced. It has been already seen that the demand was initially issued relying upon Rule 10 as well as Rule 10-A of the Central Excise Rules. As has been held by various decisions, which have all been considered in the recent decision of the Supreme Court in the case of D.R. Kohli and others v. The Atul Products Ltd. 1985 (20) E.L.T. 212 = 1985 Vol. 6 EEC 113 Rule 10-A would come into operation as a residuary rule when the applicability of Rule 10 stands excluded. Therefore, the issue of the notice relying on both Rule 10 and 10-A was certainly improper. In their reply, the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... t they had not properly disclosed in their classification list the percentage of virgin wool used by them since they had declared that such percentage was less than 5% while the percentage was really more than 5%. This charge, it appears to us, would only amount to a charge of misstatement as to the description of the goods. In that event Rule 10 would be squarely attracted. 12. The contention of Shri Sachar is that the word misstatement as to description would not cover cases of suppression of fact. He invited us to look into the words of Rule 10 as it stood before 6-8-1977 and as it stood after amendment on 6-8-1977. He points out that after amendment the Rule covered, with reference, to the larger period of limitation provided therein, cases of short levy by reason of fraud, collusion or any wilful misstatement or suppression of fact. He therefore contended that wilful misstatement would be distinct from suppression of fact and that what the appellants were guilty of was suppression of fact and not merely misstatement. We had seen the words of Rule 10 as they stood on the date of issue of the show cause notice. We are unable to accept the contention of Shri Sachar that as th ..... X X X X Extracts X X X X X X X X Extracts X X X X
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