2017 (8) TMI 783 - AT - Central Excise

Tribunal overturns duty demand citing lack of evidence and outdated precedent. Chemical examiner report discrepancies crucial.

M/s. Well Rope International Ltd. Versus CCE, Delhi

The Tribunal set aside the impugned order, allowing the appeal with consequential relief. The decision was based on discrepancies in the chemical ... Classification of goods - plastic ropes - Whether the report of the chemical examiner is admissible or not if the same is admissible whether the goods are correctly classifiable as plastic ropes to demand duty or not? - Held that: - the report of the chemical examiner is doubtful. Accordingly, the same cannot be the basis to determine the quality/classification of the goods in question manufactured form LDPE. Whether any evidence has brought on record by the Revenue to allege that the goods in question are manufactured from LDPE or not? - Held that: - During the investigation, there was statement of the appellant that they never purchased LDPE and purchased HDPE and PP and no evidence has been brought on record by the Revenue that the appellant has purchased LDPE. In the absence of evidence on record without bringing on record how the goods manufactured from LDPE, the demands are not sustainable. Whether the show cause notice is sustainable or not? - Held that: - It is seen that as per test report, deniers of the goods in question is 305.55 which is equal to 339.5 decitex. As per Section XI of Textile and Textile Articles, clause 12 (A) (b) states that man-made fibres (including yarn of two or more mono-filaments of Chapter 54), measuring more than 9000 deniers which is equal to 10000 decitex as per HSN. The adjudicating authority without any reasoning classified the goods in question, one plastic ropes which less than 10000 deniers to demand duty. Therefore, without classifying the impugned goods, the adjudicating authority cannot demand duty from the appellant. On this account also, the demand is set aside - the SCN is also barred by limitation. Appeal allowed - decided in favor of appellant. Issues:- Whether the report of the chemical examiner is admissible and if so, whether the goods are correctly classifiable as plastic ropes for duty- Whether evidence exists to prove the goods were manufactured from LDPE- Whether the show cause notice is sustainable based on legal precedentIssue No.1:The appellant contested the chemical examiner's report, arguing it lacked credibility as the examiner's responses during cross-examination were inadequate and contradictory. The second report, not originally requested, raised doubts about its authenticity. The chemical examiner failed to explain the basis for the amended report, leading to suspicions of an influenced report. The chemical examiner's response to queries further raised concerns about the veracity of the report, casting doubt on its reliability for determining the goods' classification.Issue No.2:The appellant denied purchasing LDPE, asserting they only bought HDPE and PP. The Revenue failed to provide evidence supporting the claim that the goods were made from LDPE. Without substantiated proof of LDPE purchase or usage, the demands for duty were deemed unsustainable due to lack of evidence.Issue No.3:The goods in question were found to have deniers equivalent to 339.5 decitex, falling below the 9000 deniers threshold for man-made fibers in the relevant classification. The adjudicating authority's failure to adequately classify the goods as plastic ropes exceeding 9000 deniers rendered the duty demand unjustifiable. Additionally, relying on a precedent that had been overruled by the Supreme Court further weakened the sustainability of the show cause notice, as it was time-barred.In conclusion, the Tribunal found no merit in the impugned order, setting it aside and allowing the appeal with consequential relief. The judgment highlighted discrepancies in the chemical examiner's report, lack of evidence supporting LDPE usage, and improper classification of the goods, ultimately leading to the decision to overturn the initial order.