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TMI Blog1993 (4) TMI 167X X X X Extracts X X X X X X X X Extracts X X X X ..... 64/78, 65/78 66/78 dated 28-8-1978 and the result of the test as communicated by the Chemical Examiner, New Delhi vide his CLK-1167 to 1169 dated 3rd Nov. 1978 revealed that the said yarn falls in the categories of 75D and above but below 100D. Since, according to the Chemical Examiner, New Delhi s report the said yarn was covered under the category of 75D and above but below 100D which is chargeable to duty @ Rs. 11.10 per kg. and special duty at 5% of Basic Excise duty the Superintendent, Central Excise M.O.R. III, Div. I Kanpur raised a demand for differential duty amounting to Rs. 4,98,629.25 on 105530 kgs. of rayon yarn during the period 28-8-1978 to 27-9-1978 (i.e. till another set of samples were drawn for test) at the rate of Rs. 4.50 (Rs. 11.10 (-) Rs. 6.60) amounting to Rs. 4,74,885/- + special duty of Rs, 23,744.25 @ 5% of basic excise duty total of Rs. 4,98,629.25 under Rule 10 of Central Excise Rules, 1944 vide his show cause notice dated 7-12-1978. 2. In reply to the show cause notice, the appellants had contended that such a vide variation jumping from the group of 120D - 150D to 75D in a sample of 120D cannot happen and there appeared some mistake somewhere. Th ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... sent to Chemical Examiner for ascertaining of the denier of the yarn. The Superintendent of Central Excise vide his letter dated 10-9-1980 informed the appellants that according to the Chemical Examiner, New Delhi, samples of rayon yarn of 120D and above but below 150D were actually of 106.5 deniers and, therefore, attracted the differential duty at the rate of 1.35 per kg. falling in the category of 100 deniers and above but below 120D. Accordingly, a show cause notice dated 10-9-1980 was issued demanding duty of Rs. 1,18,581.70 on the clearance of 87,838.3 kgs. effected during the period 29-3-1979 to 27-4-1979. In reply to the show cause notice, the appellants asked for details of test Memo No., date of drawal of samples, actual denier found by the Chemical Examiner. They also pleaded that the demand for the period from 29-3-1979 had been raised after 18 months of drawal of samples and that the letter dated 10-9-1980 did not constitute a formal notice to show cause and thus the demand be quashed. After the amendment to Section 11A of Central Excises and Salt Act, 1944, the case was transferred to Additional Collector and hence an amendment to show cause notice was issued on 10-9 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... The notice dated 10-9-1980 was issued under Rule 10 of Central Excise Rules as it then stood and no action can be taken under old Rule 10 after 17-11-1980 because there is no saving clause with the Notification No. 177/80 dated 12-11-1980 which omitted Rule 10. They also desired a personal hearing. 7. The Ld. Additional Collector held that the appellants had failed to contradict the Chemical Examiner s report and hence held that the charge had been conclusively established. He also held that the party had misdeclared the facts in as much as they had declared the yarn to pertain to the category attracting lower rate of duty, while a test it was found to attract higher rate of duty and hence held the charge of misdeclaration as proved. As regards the contention of the appellant that no action could be taken under the then Rule 10 as the same was omitted with effect from 17-11-1980, by Notification No. 117/80 dated 12-11-1980, the Ld. Additional Collector has held the issue is answered by the ruling of the larger Bench of the Tribunal in the case of Atma Steel (P) Ltd. v. Collector of Central Excise - 1984 (17) E.L.T. 331. The plea of time-bar is also rejected by applying the ratio ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ntradictory. For each of the appeal, the following options are relied. Aluminium Corpn. of India v. Union of India of Others - 1978 (2) E.L.T. (J 320) and Bata Shoe Co. (P) Ltd. v. Union of India - Others - 1978 (2) E.L.T. (J501) for the proposition that copy of the test report has to be furnished. Ramalingam Choodambikai Mills v. Government of India - 1984 (15) E.L.T. 407 (Madras) for the proposition that in case of varying results, it is necessary to test the third sample. Madhu Wool Spinning Mills v. Union of India and Others - 1983 (14) E.L.T. 2200 (Bombay) to the proposition that in case of varying results it is not permissible to select the conclusion which suits the authorities. (ii) The impugned demands are from the date of the sample drawn until the next sample drawn i.e. from 28-8-1978 to 27-9-1978 (in E.A. 2969/91) and from 29-3-1979 to 27-4-1979 (in E.A. 4228/91) and from 29-6-1973 to 20-7-1973 (in E.N. 5059/91) whereas the demands should be confined only in respect of that particular lot from which the sample was drawn. For this proposition, following rulings are cited Madhu Woollen Spinning Mills (supra); Standard Woollen Mills v. Collector of Central Excise ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... accept one test result for the entire production of one month has to be confirmed. 13. We have carefully considered the submissions and perused the records and have gone through the citations relied by both the sides. 14. The appellants had been manufacturing the rayon yarn of cellulosic origin (man-made) by the process stated already in the preceding paragraphs. In Appeal No. 2969/91-D, the denierage manufactured by the appellant was between 120D to 150D; the test results in Test Memo 64/78 dated 28-8-1978 showed actual denierage of 82 CLK 1167; 65/78 and 66/78 revealed denierage of 76 CLK 1169 respectively and hence differential duty was demanded for the period 28-8-1978 to 27-9-1978 by show cause notice 7-12-1978. This has been adjudicated by Assistant Collector only by his order dated 31-8-1987. Thus, there is a delay of about 9 years. As we have seen, the appellant s contention is such a variation could not be possible as the clearances of previous and subsequent periods and the test results were tallying with the type manufactured by them and that it is neither theoretically nor practically or technically possible to produce the yarn of 75D from spinnerette meant for 120 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... est results are not sufficient to uphold the demands. In the result the contention of appellants in E.A. 2969/91-D is accepted and appeal allowed. E.A. 4228/91-D As can be seen from the facts of the case, the samples had been drawn on 29-3-1979 and show cause notice has come to be issued on 10-9-1980 and adjudicated on 2-7-1991 after a period of 11 years. The appellants are entitled to succeed on this ground alone in view of the rulings rendered in the case of Bhagwandas S. Tolani and In Re: M/s. Girwar s case. As can be seen the demands have been raised again by issue of fresh show cause notice dated 10-9-1980. The Department were aware of the test results on 12-6-1979. Therefore, the show cause notice has been issued after a period of 18 months. Therefore, the appellants contention as time bar is also sustainable. Even on merits, it has to be held that the Department has not placed sufficient evidence which could be said to be conclusive in nature. The request of retest has not been considered in this case. Further, the appellants specifically urged that technically it is not possible to produce the yarn of the denierage as shown in the test results. There is no finding on t ..... X X X X Extracts X X X X X X X X Extracts X X X X
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