2017 (9) TMI 1430 - AT - Central Excise

Supreme Court remands duty calculation case due to weight gain discrepancies in spin finish oil usage

The Supreme Court remanded the case for reconsideration regarding the calculation of duty based on weight gain from spin finish oil usage. Discrepancies ... Clandestine removal - Held that: - the Chartered Engineer's Certificate produced by the appellant before the adjudicating authority, the claim was that there cannot be any weight gain instead there would be weight loss on use of oil during texturizing process; whereas, their present report of SASMIRA acknowledges weight gain in the range of 0.2 to 0.5%. Weight gain in the range of 0.2% to 0.5% the aforesaid statements definitely has evidentiary value and could be used as corroboration to the expert's evidence. Even if the weight gain at the lowest of the range i.e. 0.2%, mentioned in the opinion dt. 12.05.2017, is considered, then also some removals would be there without payment of duty - to arrive at the exact quantum of clearance without payment of duty, applying the weight gain as 0.2%, the matter needs to be remanded to the adjudicating authority to quantify the demand - appeal allowed by way of remand. Issues:1. Calculation of duty based on weight gain due to usage of spin finish oil.2. Reliability of technical expert opinions from Manmade Textile Research Association and SASMIRA.3. Admissibility of statements from individuals as evidence in demanding duty.4. Discrepancy between weight gain percentages in technical reports and its impact on duty calculation.Analysis:Issue 1: Calculation of duty based on weight gain due to usage of spin finish oilThe appeal was remanded by the Hon'ble Supreme Court for reconsideration. The appellant argued that the theoretical calculation of duty based on weight gain of 4.44% was not substantiated by technical expert opinions. The appellant presented an opinion from SASMIRA stating weight gain could be 0.2 to 0.5%, challenging the basis for demanding duty. The Revenue, however, contended that evidence from various persons' statements supported the duty demand, citing illicit removal of goods without payment. The Tribunal noted discrepancies in weight gain percentages and the lack of conclusive evidence to support the duty calculation.Issue 2: Reliability of technical expert opinionsThe technical reports from Manmade Textile Research Association and SASMIRA presented conflicting weight gain percentages, raising doubts about the accuracy of duty calculation. The Tribunal scrutinized these opinions to determine the actual weight gain due to oil usage during the manufacturing process. The discrepancies in expert opinions highlighted the need for a thorough assessment before confirming the duty demand.Issue 3: Admissibility of statements as evidenceStatements from individuals implicated in the removal of goods without payment of duty were considered as evidence by the Revenue. The Tribunal emphasized the importance of corroborating such statements with technical expert opinions to establish the factual basis for demanding duty. The statements were evaluated alongside the technical reports to ascertain the validity of the duty claim.Issue 4: Discrepancy in weight gain percentages and duty calculationThe Tribunal acknowledged the discrepancy between the weight gain percentages provided by different technical reports. The varying ranges of weight gain indicated the complexity of determining the actual weight gain due to oil usage. The Tribunal concluded that a remand to the adjudicating authority was necessary to quantify the demand accurately based on the expert opinions and statements. The appeals were allowed for remand to address the discrepancies and determine the duty amount appropriately.Overall, the judgment highlighted the importance of aligning technical evidence with statements to establish a robust basis for demanding duty and emphasized the need for a meticulous assessment of all factors involved in the duty calculation process.This detailed analysis of the judgment addresses the key issues raised in the case, providing a comprehensive overview of the arguments presented by the appellant and the Revenue, as well as the Tribunal's considerations in reaching its decision.