CESTAT Calls for Re-determination as Micro-Cellular Goods Assessment Falters, Questions Reliance on Unofficial Test Report [Read Order]

The Mumbai bench of the Customs Excise and Service Tax Appellate Tribunal ( CESTAT ) calls for re-determination as the assessment of micro-cellular goods falters, questioning the reliance on an unofficial test report.

The appellant-assessee Sewa Elastomers were in the business of manufacturing articles of rubber which they claimed to be in conformity with description corresponding to tariff item 4008 1910 and 4008 2110 and chargeable to ‘nil’ rate of duty therein, and to tariff item 4008 1110 and 4008 1990 of Schedule to Central Excise Tariff Act, 1985 of which the former was entitled to exemption, at serial no. 39, in notification no. 3/2005-CE dated 24th February 2005 and the latter, as the sole dutiable goods, cleared by resort to notification no. 8/2003-CE dated 1st March 2003 which, through threshold and slab exemptions, was intended for incentivizing ‘small scale industry ( SSI )’ units. M/s Konark Rubbers, the respondent-assessee and also in the business of manufacturing articles of rubber, had been clearing goods on payment of duties applicable to tariff items in Schedule to Central Excise Tariff Act, 1985.

Mr. Sunil Kumar Katiyar representing the appellant contended that the test carried out on samples was inappropriate and their acquiescence with the ‘morphology’ tests had been misconstrued as concurrence with the whole even as samples tested at their initiative at private laboratories were in their favour. The adjudicating authority was disinclined to accept the authenticity of samples for acceding to the claim of the appellant-assessee.

It was further alleged that the test report lacked validity owing to admission, in cross-examination of the chemical examiner, that testing or analysis for lack of conformity with declaration had not been undertaken. It was further pointed out that, on an earlier occasion, proceedings for shifting classification from subheading 4008 11 to subheading 3921 19 of Schedule to Central Excise Tariff Act, 1985 had, upon remand by the tribunal for carrying out the test appropriate to referred note in chapter 40 of Schedule to Central Excise Tariff Act, 1985, been dropped by the adjudicating authority thus validating reclassification only upon such outcome.

The bench noted, on previous occasion, the tribunal, in similar circumstances, had directed visit and observation of the manufacturing process coupled with testing of samples. Inevitably, that should be undertaken in relation to the impugned goods as it needs to be ascertained, from fact and from rules of interpretation of tariff schedule, if the products, comprising of ‘rubber’ and ‘low density polypropylene (LDPE)’ find fitment with proposed description or claimed description. The grounds of appeal preferred in the challenge mounted by Revenue to the impugned order confirms the need for re-determination. On the outcome of fresh determination also rests the appropriateness of penalty imposed on the individual-appellant

The two member bench of the tribunal comprising Ajay Sharma ( Judicial member ) and C.J Mathew (Technical member) concluded that the impugned order was set aside and notice restored to the original authority for fresh decision on claim of appellant-assessee after test, CESTAT, are inclined to remand the matter insofar as appellant-assessee was concerned, the appropriate disposal of this appeal of revenue too was re-determination of the dispute by the original authority. Accordingly, set aside the impugned order and allow the appeals by way of remand.

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