TMI Blog1993 (3) TMI 98X X X X Extracts X X X X X X X X Extracts X X X X ..... is quoted hereunder :- "Recovery of duties not levied or not paid or short-levied or short-paid or erroneously refunded. - (1) When any duty of excise has not been levied or paid or has been short-levied or short-paid or erroneously refunded, a Central Excise Officer may, within six months from the relevant date, serve notice on the person chargeable with the duty which has not been levied or paid or which has been short-levied or short-paid or to whom the refund has erroneously been made, requiring him to show cause why he should not pay the amount specified in the notice : Provided that where any duty of excise has not been levied or paid or has been short-levied or short-paid or erroneously refunded by reason of fraud, collusion or any wilful mis-statement or suppression of facts, or contravention of any of the provisions of this Act or of the rules made thereunder with intent to evade payment of duty, by such person or his agent, the provisions of this sub-section shall have effect, as if for the words 'Central Excise Officer', the words 'Collector of Central Excise', and for the words 'six months', the words 'five years' were substituted." Before proviso is made appl ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... te uniform thickness. Thus, there is always little plus and minus size of thickness. That is why, according to the petitioner, the thickness of sheet glass is known and understood and described by a nominal thickness. Keeping this in view of the Bureau of Indian Standard has laid down Indian Standard Specifications for flat transparent sheet glass by I.S. 2835-1987 (which has been referred in the impugned notice). According to it in the nominal thickness of 3 mm or 4 mm of such glass-sheet the range of thickness is between 2.80 mm to 3.20 mm and 3.80 mm to 4.20 mm for 4 mm thickness. Similarly, Indian Standard Specification for safety glass by I.S. 2553- 1971 specified the requirement specified for laminated safety glass under Paragraph 4.3 for laminated safety glass between 4.0 to below 7.0 range and tolerance permissible + is 0.40. The petitioner's case falls under this category. Thus, for 6 mm laminated safety glass it could be between 5.60 mm to 6.40 mm. The sheet glass purchased by the petitioner is marked by the seller and also by the producer, viz. the petitioner has nominal thickness of 3 mm and 4 mm sheet glass respectively. For manufacturing laminated safety glass of the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... hese facts on the basis of which the petitioner states that at no stage there was any kind of mis-statement muchless wilful mis-statement or suppression of any fact by the petitioner in the payment of excise duty. 5. The case of the respondents, on the other hand, is that for attracting duty of central excise under Notification No. 68/87 dated 1st March, 1987, the duty of laminated glass is dependant upon thickness in milimetre per square metre and the present rate of duty is Rs. 31.50 P. per milimetre or part thereof per square metre. When the Officers of the Preventive Branch visited the petitioner's unit on 17th July, 1992, on close scrutiny, found the thickness of laminated safety glass sheets were more than 6 mm. However, on investigation by going through the technical of the manufacturing process including "Encyclopedia of Glass ceramic and cement" edited by Martin Grayson and published by John Wile and Sons and "Glass Engineering Handbook" (third edition) written by George W. Mc Idlan and Errol B. Shand and published by Mc Graw Hill Book Co., the relevant pages of which are relied upon in the show cause notice, it became evident that in the process of manufacturing lamina ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ckness or the nominal thickness. If actual thickness was to be measured for each laminated glass-sheet, if not done and made the department to believe the thickness mentioned in RG-1 register that they are actual thickness and the respondents having believed the same it could be said that it could be a case of mis-statement making belief to the respondents what it is not, though further question would be whether such mis-statement is wilful or not. We find in this case even the respondent does not dispute this. In the counter affidavit it is admitted that the thickness of the sheet is described by nominal thickness in milimetre and this is a nominal thickness which represents the thickness of a glass-sheet. It is further admitted that it is not possible to manufacture sheet glass with a precise scientifically accurate thickness and there is bound to be some variation on the plus and minus (+) sides. This is precisely why wherever any tolerance limit is prescribed any authority they are + (plus and minus) to cover both the higher and lower sides. The factor is said to be inherent in the process which is taken care by tolerance limit. From the perusal of the counter affidavit and the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 2553 (Part II) 1992. By the method laid down in 1992 as aforesaid they have directed to make measurement in the case of laminated glass of the total thickness of the sheet glass and the thickness of the interlayer and the total thickness of the laminated safety glass manufactured. Till this direction to the department for measuring laminated glass, as aforesaid for the earlier period there was neither any direction, nor anything existed on the record that what was required under the rules was not done by the petitioner. The only argument by the respondent is that it was the duty of the petitioner to have correctly described for the payment of duty and if he has not correctly described, he is liable to pay tax and that would also amount to wilful mis-statement and thus covered by the proviso. We find since year after year declaration have been made by the petitioner ...... was not making any suppression of any fact or by committing fraud or collusion the statement even given before the authorities were all which were within the knowledge of the respondent nothing was concealed except what was argued that technical know-how of the manufacturing process was not revealed to the respond ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... l mis-statement. Further even this would not lead to an inference of suppression of fact. Again, as we have said above, suppression of fact would only be those facts which are exclusively in the knowledge of the petitioner and in that regard the technical know-how would not fall. 8. Lastly, the argument is that since the petitioner was selling to Railways and Defence Department, laminated safety glass of 6.3 mm doubt arose as to why out of the same material which the petitioner was receiving from the manufacturer of sheet glass two categorisation was made, one of 6 mm and the other of 6.3 mm. If the order placed by the Railway and the Defence Department was of 6.3 mm, which admittedly come within the tolerance limit of 6 mm. The question is if laminated safety glass, the supply of which is made to the Railways, which if it falls within the same range, how range of laminated safety glass was manufactured. The question may be if the supply made to the Railways was true or not, i.e. whether such description was correct or not, to which it is not necessary for us to go into. However, this may only create doubt and merely a doubt being created on account of the said transaction of ca ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... information when the manufacturer know otherwise is required before it is saddled with any liability beyond the period of six months had to be established ....As mentioned hereinbefore, mere failure or negligence on the part of the producer or manufacturer either for doubt as to whether licence was required to be taken out or where there was scope for doubt whether goods were dutiable or not would not attract S. 11A of the Act." 11. In Oudh Sugar Mills Ltd v. Union of India [1978 (2) E.L.T. (J 172)] it was held :- "Show cause notice issued on the basis of average production, no evidence for removal of goods without payment of duty - Human element plays a significant part in the process of manufacture - Average production cannot be made basis for issue of show cause notice - The findings based on such show cause notice are without any tangible evidence and are based only on inferences involving unwarranted assumptions and are vitiated by an error of law." 12. In view of the findings recorded by us above, and keeping in view the aforesaid decision we find the impugned show cause notice dated 4th January, 1993 (Annexure-2 to the petition) is unsustainable and is hereby quash ..... X X X X Extracts X X X X X X X X Extracts X X X X
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