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1997 (5) TMI 306 - AT - Central Excise
Issues Involved:
1. Allegation of non-duty-paid M.S. Flats not exceeding 5 mm thickness. 2. Seizure and confiscation of M.S. Flats. 3. Adjudication and appellate decisions on the seized goods. 4. Validity of random sampling and measurement methods. 5. Application of tolerance standards in thickness measurement. 6. Presumption of duty-paid status of goods purchased from the market. Issue-wise Detailed Analysis: 1. Allegation of Non-Duty-Paid M.S. Flats Not Exceeding 5 mm Thickness: The Central Excise Officers seized 357.71 M.Ts of M.S. Flats from the respondent's premises, alleging that the thickness of these flats did not exceed 5 mm, making them liable for duty under Notification 208/83-C.E. The Works Manager of the respondent admitted in his statements that the samples drawn at random were found to be less than 5 mm in thickness. However, the respondent contended that they purchased M.S. Flats exceeding 5 mm thickness and that the seized flats were not entirely verified or weighed to determine the actual thickness. 2. Seizure and Confiscation of M.S. Flats: The seized M.S. Flats were released provisionally to the respondent on 17-9-1985. The Deputy Collector of Central Excise held the seized stock liable to confiscation under Rule 9(2) of the Central Excise Rules, 1944, and appropriated Rs. 48,245.63 towards the amount of duty and Rs. 2 lakhs towards the value of the goods from the bond executed by the respondent for provisional release. 3. Adjudication and Appellate Decisions on the Seized Goods: The lower appellate authority found that the respondent was not a manufacturer but a processor and trader of M.S. Flats. The authority noted that the quantity seized was not entirely verified or weighed to determine the actual thickness and that the proceedings against the three manufacturers were dropped. Consequently, the respondent was not held liable for the violation of Central Excise Rules. The Revenue appealed this decision before the Tribunal. 4. Validity of Random Sampling and Measurement Methods: The Revenue argued that random sampling is a generally recognized method and that the Works Manager's statements confirmed the thickness of the flats being less than 5 mm. The respondent countered that the samples were not representative and that no work-sheet of measurements was prepared, making the conclusion about the thickness highly doubtful. The Tribunal found merit in the respondent's argument, noting the lack of representative sampling and measurement records. 5. Application of Tolerance Standards in Thickness Measurement: The respondent argued that the Indian Standard Institute (ISI) provides a tolerance of +0.5 mm for flats up to 12 mm thickness, which would classify the seized flats as exceeding 5 mm. The Tribunal agreed, stating that applying the ISI tolerance to the minimum requirement of 4.75 mm thickness would deem the flats to be exceeding 5 mm. The Tribunal found that the seizing officers did not apply any tolerance when measuring the thickness, further casting doubt on the conclusion that the flats were less than 5 mm. 6. Presumption of Duty-Paid Status of Goods Purchased from the Market: The respondent argued that the seized flats should be presumed to be duty paid, citing the Apex Court's decision in the case of Collector of Central Excise v. Decent Dyeing. The Tribunal noted that the respondent produced purchase vouchers and challans for M.S. Flats exceeding 5 mm thickness from about 20 suppliers. It was deemed unbelievable that the respondent and all suppliers would connive to sell flats not exceeding 5 mm thickness. Conclusion: The Tribunal held that it was not proved that the seized flats were of thickness not exceeding 5 mm. This finding was consistent with the purchase vouchers and challans produced by the respondent. Consequently, the Revenue's appeal was rejected, and the Cross Objection filed by the respondent was dismissed as they had obtained complete relief at the lower appellate level.
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