Exemption computation evidence dispute led the High Court to direct reference on whether log book entries could be ignored.

In determining fly ash content in asbestos cement pipes and couplings for exemption under a notification, the evidentiary weight of the log book versus RG-1 register figures was the central issue. The High Court noted that the log book recorded the raw material mix and dry weight of finished goods, and held that the Tribunal had erred in relying on RG-1 and RT-5 entries without properly considering those contemporaneous records, especially where stock register manipulation could not be excluded. The reference application was accepted and the question was directed to be referred for the Court's opinion.

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Issues: Whether the reference application deserved acceptance for referring the question whether, in determining the fly ash content of asbestos cement pipes and couplings for exemption under the notification, the Tribunal could ignore the quantities shown in the log book and rely upon the RG-1 register figures.

Analysis: The Department's case was that the log book maintained by the assessee recorded the raw material mix and the dry weight of the finished goods, and that the percentage of fly ash had to be worked out on that basis. The Court found that the Tribunal had approached the matter from an erroneous angle by relying on RG-1 and RT-5 entries without giving due weight to the log book, particularly when manipulation of stock registers could not be ruled out. On that reasoning, the question raised was held to require consideration by the Court.

Conclusion: The reference application was accepted and the question was directed to be referred for the opinion of the Court.

Final Conclusion: The Court permitted the reference to be made on the disputed evidentiary basis for computing the exemption condition and did not finally decide the substantive classification dispute.

Ratio Decidendi: Where the statutory authority finds that the Tribunal has relied on one set of production records to the exclusion of material contemporaneous records, and the matter raises a substantial question requiring the Court's opinion, a reference can be directed on that question.

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