Full Judgment
2. Ld. Counsel stated that the appellants were engaged in the manufacture of Synthetic Filament Yarn, both the textured and non-textured type. Such Yarn of 210 denier was exempt from payment of duty under Notification No. 31/93; a tolerance limit of 4 per cent was provided.
3. A sample representing quantity of 343.755 kgs. of textured yarn in balance with them on 23-4-1993 was drawn and sent for testing.
Thereafter the appellants received the show cause notice on the ground that the denier was above the prescribed limit. On their request the sample was tested again and the test result [communicated] to them.
This test report showed a denier of 219.5 (whereas the earlier test report had shown the denier as 228.4).
4. The Chapter note 2 of Chapter 54 prescribes a method of testing and, therefore, while making the request for retesting they had specifically drawn attention to this Chapter note and prayed that it may be brought to the notice of the Chemical examiner but neither the test report nor the adjudication order indicates whether the method prescribed in this Chapter note was duly followed. Their request for cross-examination of the Chemical examiner, in view of the difference between the two test reports, was also not acceeded to.
5. It was, therefore, their contention that the principles of natural justice had not been duly observed. It was also their submissions that the department has applied the test result to the entire quantity in question which included both textured and non-textured yarn; and it was their contention that the test report could be applied only to the quantity of textured yarn in stock from which the sample was drawn.
6. It was their submission that the Tribunal has already held in the case of Asha Jyoti Spinning Mill, Ludhiana 1995-96 (26) ETR 793 that when the case of the Department is based entirely on test report of the Chief Chemist, cross-examination was necessary and the matter was remanded. Similarly, in the case of Kiran Spinning Mill, Bombay reported in 1988 (33) E.L.T. 137 (Tribunal) it has been held that test report is applicable only to the quantity of yarn from which sample has been drawn and not entire quantity, therefore, in the light of the above judgment; it was their prayer that unconditional stay may be granted and the matter may be remanded at this stage itself.
7. In response to the queries from the Bench, the Ld. Counsel clarified whereas item 54.02 covered Synthetic Yarn which was not textured and 54.03 covered such textured yarn Notification No. 31/93 Acts Serial No.16 covers both Headings. 54.02 and 54.03 refers to Nylon Filament Yarn or Poly Proylene Multi-filament Yarn of 210 deniers with" tolerance of 4 per cent but does not differentiate between textured and non-textured yarn that is the same denier with the same tolerance is prescribed and there is no difference in this respect.
8. Ld. D.R. opposed the prayer stating that both the test reports of the sample show that the denier of yarn in question was above the prescribed limit, including the tolerance limit. Since the test reports specifically indicate the deniers. There was no reason to allow cross-examination.
9. Further, it could not be claimed that the result should be applied only to the quantity in stock in the absence of any contention regarding any change in material or process.
10. The Chapter note 2 applies to textured yarn but the notification only talks of yarn within the prescribed deniers. Therefore, at this stage all that is required to be seen is whether the product was within the permissible limit of deniers including tolerance limit or not.
11. The appellants have not pleaded financial hardship and have based their request only on merits; And the purpose of stay it was sufficient for the Department to show that the deniers found on test were beyond the prescribed limit, 12. We have considered the above submissions. We observe that the main issue in this case is as to whether the yarn in question was within the prescribed limit of 210 denier (with tolerance of 4 per cent) and both the test reports show that the yarn was of a higher denier.
13. The Serial No. 16 in the notification clearly prescribes 210 deniers, with tolerance of 4 per cent.
15. The case can be examined at length at the time of hearing of the main appeal and not at this stage. Prima facie the case is in favour of the Department and not the appellants. We, therefore, reject the request; However, we allow eight weeks time within which to deposit the amount in question failing which the appeal will be liable to dismissed without further notice.