Periodic sample testing and wrong-rule citation in excise law did not invalidate the differential duty demand.

Refusal to retest a third sample was treated as consistent with natural justice where two earlier samples had already been tested and showed substantially the same count. Periodic excise sampling was recognised as a practical necessity, and a valid test report could govern yarn produced until the next sample unless the assessee proved a material change in manufacture. The absence of a separate statutory rule for sample testing did not bar reliance on the reports, because the power to draw samples implied the power to test them. A demand was also held sustainable under Rule 9B even though it had been cited under Rules 10 and 10A, since a wrong provision reference does not invalidate an otherwise supportable levy.

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Issues: (i) whether refusal to test the third sample violated the principles of natural justice; (ii) whether the test reports drawn on one date could govern the yarn manufactured up to the next sample date; (iii) whether the absence of a specific statutory rule for testing samples prevented reliance on the test reports; and (iv) whether the demand could be sustained under Rule 9B despite being issued under Rules 10 and 10A.

Issue (i): whether refusal to test the third sample violated the principles of natural justice.

Analysis: The first two samples had already been tested and had substantially indicated the same count. The petitioner did not challenge the manner in which the samples were drawn or the reliability of the two reports. In those circumstances, a further test of the third sample was treated as unnecessary.

Conclusion: The refusal to test the third sample did not amount to a breach of natural justice and the contention failed.

Issue (ii): whether the test reports drawn on one date could govern the yarn manufactured up to the next sample date.

Analysis: The Court held that periodic sampling is a practical necessity in excise administration and that the result of a validly drawn sample may govern production until the next sample, unless the assessee shows a change in the manufacturing process or output count after sampling. No such change was shown here.

Conclusion: The test reports were rightly applied to the goods manufactured between the two sample dates and the contention failed.

Issue (iii): whether the absence of a specific statutory rule for testing samples prevented reliance on the test reports.

Analysis: Rule 56 authorized the taking of samples, and the power to test the samples was treated as implicit in that authority. The mode of proof did not require a separate rule on testing, especially when the assessee itself received a sample and could have it tested.

Conclusion: The test reports were admissible and could be acted upon even without a separate rule prescribing the testing procedure.

Issue (iv): whether the demand could be sustained under Rule 9B despite being issued under Rules 10 and 10A.

Analysis: The Court held that an order is not invalid merely because the wrong provision is mentioned if it can be supported under the correct provision. Since the levy was provisional and the differential duty was demanded after testing, the demand was referable to Rule 9B.

Conclusion: The demand was sustainable under Rule 9B and the mistaken reference to Rules 10 and 10A did not vitiate it.

Final Conclusion: The challenge to the differential excise levy failed in all respects, and the levy was upheld.

Ratio Decidendi: In excise matters, valid sample test reports may be relied upon for periodic production until the next sample unless the assessee proves a material change in manufacture, and an order is not invalidated by citation of a wrong rule if it is otherwise supportable under the correct statutory provision.

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