Exemption for nylon monofilament yarn upheld where departmental testing supported declared denierage and no contrary test existed.

Departmental testing of representative samples supported the declared denierage of nylon monofilament yarn, and that evidence was not displaced by any contrary test for the earlier clearance period. On that basis, exemption under Notification No. 5/98-CE could not be denied merely by applying a theoretical denierage formula. The demand of duty and penalty for past clearances was therefore set aside, and the benefit of the notification was held admissible.

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Issues: Whether the appellants were entitled to the benefit of Notification No. 5/98-CE dated 02.06.1998 in respect of nylon monofilaments yarn, and whether the demand and penalty confirmed for the past clearances could be sustained.

Analysis: The goods had already been held to be nylon monofilaments yarn, and samples drawn from the seized goods were tested by the departmental Dy. Chief Chemist. The test report indicated denierage broadly in conformity with the appellant's declaration. That report was not displaced by any contrary test for the earlier clearance period. In those circumstances, the denial of exemption for the period prior to 05.11.1998 could not rest only on a theoretical formula for denierage, particularly when the departmental test itself supported the declared position.

Conclusion: The benefit of Notification No. 5/98-CE was held admissible, and the confirmation of duty demand and penalty was set aside in favour of the assessee.

Ratio Decidendi: Where departmental testing of representative samples supports the declared denierage of goods, exemption cannot be denied for an earlier period merely on the basis of a theoretical calculation in the absence of any contrary test result.

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