Classification demand fails when sample test results are not properly linked to the manufacturer's goods.

A classification-based duty demand on polyurethane washers was found unsustainable where the test samples were not drawn from the manufacturer's premises and were taken only from the buyer's premises after production had ceased. The seizure mahazar from the other premises was not a relied-upon document in the show cause notice, so the evidentiary link needed to support the classification was inadequate. On that basis, the demand could not rest merely on the sample test results. The duty demand, penalty, and interest were set aside in favour of the assessee.

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Issues: Whether the duty demand and related penalty could be sustained on the basis of test results of samples not drawn from the manufacturer's premises and where the seizure mahazar was not relied upon in the show cause notice.

Analysis: The demand was founded on classification of polyurethane washers and on test results obtained from samples taken from the buyer's premises after production at the manufacturer's end had stopped. The samples were not drawn from the manufacturer's premises, and the mahazar relating to seizure from another premises was not a relied-upon document in the show cause notice. In these circumstances, the evidentiary basis for determining classification against the assessee was held to be unsatisfactory, and the demand could not be supported merely on such sample-based material.

Conclusion: The duty demand, penalty, and interest were not sustainable and were set aside in favour of the assessee.

Ratio Decidendi: A classification and duty demand cannot be sustained on test results of samples not properly linked to the manufacturer's goods, particularly where the seizure document forming the basis of such samples was not relied upon in the notice.

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