Excise duty liability and paper valuation must follow the correct liable person and applicable trade tolerance norms.

Excise duty for clearances made before acquisition could not be fastened on the purchaser without determining liability against the actual manufacturer for that period, and the demand required readjudication against the correct person chargeable under the levy and collection scheme. The valuation dispute on paper also had to be reconsidered by applying the accepted trade practice and the prescribed tolerance between nominal and actual weight before any short levy could be found. The impugned order was set aside and the matter remitted for fresh adjudication on both liability and valuation.

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Issues: (i) Whether duty demands for clearances made before the purchaser took over the concern could be fastened on the purchaser as the person liable to pay duty. (ii) Whether the assessable value and duty on paper were required to be redetermined by applying the accepted trade practice and the prescribed tolerance in nominal weight versus actual weight.

Issue (i): Whether duty demands for clearances made before the purchaser took over the concern could be fastened on the purchaser as the person liable to pay duty.

Analysis: Liability to excise duty was linked to the person chargeable under the scheme of levy and collection under Section 3 of the Central Excises and Salt Act and the connected rules governing who is required to pay duty and when. The notices related to a period anterior to the appellant's acquisition of the undertaking, and the actual manufacturer for that period was the earlier entity. A demand for an earlier period could not be determined against the purchaser without hearing the manufacturer who had cleared the goods during that period.

Conclusion: The demand could not be finally sustained against the appellant for the pre-acquisition period, and the matter required readjudication against the correct person liable to duty.

Issue (ii): Whether the assessable value and duty on paper were required to be redetermined by applying the accepted trade practice and the prescribed tolerance in nominal weight versus actual weight.

Analysis: The dispute on valuation turned on whether duty was to be worked out on nominal weight or actual weight within the accepted tolerance of plus or minus 2.5 per cent, having regard to the established paper-trade practice and the applicable assessment norms. The earlier findings were set aside because the proper trade and Government fixed norms had to be ascertained and applied before any short levy could be determined.

Conclusion: The valuation and duty issue was remitted for fresh determination after applying the relevant trade practice and tolerance norms.

Final Conclusion: The appeal succeeded to the extent that the impugned order was set aside and the matter was sent back for fresh adjudication, with the appellant obtaining relief on the question of pre-acquisition liability and valuation requiring reconsideration.

Ratio Decidendi: Excise duty liability must be determined against the person legally chargeable for the relevant period, and a demand for a past period cannot be fastened on a subsequent purchaser without adjudicating the liability of the actual manufacturer; valuation disputes must also be decided by applying the governing trade and assessment norms.

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