2009 (1) TMI 271 - AT - Central Excise

Drawn on Samples Testing held that - In any case when a reputed company which has also been recognized by the Ministry of Commerce and Industries has given the test report and when that test report is in variance with the report of Chemical Examiner the request of the appellant for re-test ought to have been considered favourably. This has not been done. - we do not find any strong reason for rejecting the test report produced by the appellant from two sources one from reputed testing organization and the other from the destination Port. The evidence also has been produced that payment has been made based on the test results at the destination Port. When it is less than 62% depending upon the shortage the penalties have been paid by the exporter. In view of these factors we find that the impugned order which has been passed in a very cursory manner without taking into account the submission of the party is liable to be set aside.

Issues Involved:
1. Whether the Commissioner (Appeals) passed a non-speaking order.
2. Whether the Principles of Natural Justice were violated.
3. Validity of the sampling and testing procedure.
4. Reliability of the test reports from M/s. Mitra S.K. Pvt. Ltd. and the destination port in China.
5. Justification for the denial of the concessional rate of duty under Customs Notification No. 62/2007.
6. Consideration of the appellant's request for re-test.
7. Whether the lower authority's action of encashing the Bank Guarantee was justified.

Detailed Analysis:

1. Non-Speaking Order by Commissioner (Appeals):
The appellants argued that the Commissioner (Appeals) passed a non-speaking order without providing any independent findings. The Commissioner merely upheld the lower authority's order without addressing the issues raised by the appellants. This was deemed unsustainable in law and deserving of being set aside.

2. Violation of Principles of Natural Justice:
The appellants contended that the sample from the lot of 1000 M.T. was not drawn in their presence or that of their Customs House Agent (CHA), violating the Principles of Natural Justice. They referred to Public Notice No. 9/2006, which prescribes the procedure for sample collection, and claimed this procedure was not followed. The Revenue, however, argued that the samples were drawn in the presence of the CHA and mixed with previous samples to create representative samples, which were then tested.

3. Sampling and Testing Procedure:
The appellants highlighted that the sampling and testing procedures were flawed. They pointed out discrepancies in the Customs laboratory report, such as the absence of moisture content and other impurities, which are crucial for determining iron content. They also noted that the Customs report was cursory compared to the detailed reports from M/s. Mitra S.K. Pvt. Ltd. and the destination port in China.

4. Reliability of Test Reports:
The appellants presented test reports from M/s. Mitra S.K. Pvt. Ltd., a recognized agency by the Ministry of Commerce and Industries, and from the destination port in China, both indicating iron content below 62%. The Revenue dismissed these reports, arguing that they were not conducted in the presence of Departmental officers or the CHA. The Tribunal found the reports from the recognized agency and the destination port to be credible, especially given the detailed chemical compositions provided.

5. Concessional Rate of Duty Under Notification No. 62/2007:
The concessional rate of duty under Customs Notification No. 62/2007 is applicable if the iron content is less than 62%. The appellants' reports showed iron content below this threshold, while the Customs laboratory report indicated 62.37%. The Tribunal noted that the Customs report lacked details on moisture content and other impurities, which are significant for accurate iron content determination.

6. Request for Re-Test:
The appellants' request for a re-test was ignored by the lower authority. The Tribunal found this to be a denial of the Principles of Natural Justice, especially given the discrepancies between the reports and the credibility of the appellant's reports.

7. Encashing the Bank Guarantee:
The appellants argued that the lower authority encashed the Bank Guarantee despite the ongoing dispute, violating the guidelines laid down by the Board. This was not addressed by the Commissioner (Appeals).

Conclusion:
The Tribunal found that the impugned order was passed in a cursory manner without considering the appellants' submissions. The Tribunal set aside the impugned order, allowed the appeal with consequential relief, and disposed of the cross-objection. The decision emphasized the need for adherence to the Principles of Natural Justice and the credibility of the test reports from recognized agencies.

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