Excise demand on alleged LDPE plastic ropes fails where expert evidence is doubtful and classification remains unreasoned.

Doubtful chemical examiner's reports, without convincing cross-examination support or clear procedural basis, were found insufficient to establish that the goods were LDPE-based plastic ropes. The Revenue also failed to produce independent evidence of LDPE procurement or use, so the allegation of manufacture from LDPE remained unproved. In the absence of a reasoned classification of the goods, and with the reliance on an overruled Larger Bench view being misplaced, the excise demand and notice were unsustainable. The impugned order was set aside and consequential relief followed.

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Issues: (i) whether the chemical examiner's report could be relied upon to hold that the goods were plastic ropes manufactured from LDPE and, if so, whether duty could be demanded on that basis; (ii) whether the Revenue had adduced evidence to show that the goods were manufactured from LDPE; (iii) whether the demand was sustainable in the absence of proper classification and in view of limitation.

Issue (i): Whether the chemical examiner's report could be relied upon to hold that the goods were plastic ropes manufactured from LDPE and, if so, whether duty could be demanded on that basis.

Analysis: The first report itself noted that it was not possible to determine the specific gravity of the polymer on an additive-free basis. The subsequent amended report was found to be unsatisfactory because it was not supported by a convincing explanation in cross-examination and appeared to have been issued on the basis of retained sample material without adequate procedural clarity. The reliability of the expert evidence was therefore doubted.

Conclusion: The chemical examiner's report was not fit to be the sole basis for concluding that the goods were LDPE-based plastic ropes.

Issue (ii): Whether the Revenue had adduced evidence to show that the goods were manufactured from LDPE.

Analysis: The record showed that the appellant had consistently stated that it purchased HDPE and polypropylene, while the Revenue did not produce independent evidence to establish procurement or use of LDPE. In the absence of supporting material, the allegation that the goods were manufactured from LDPE remained unproved.

Conclusion: The Revenue failed to establish that the goods were manufactured from LDPE.

Issue (iii): Whether the demand was sustainable in the absence of proper classification and in view of limitation.

Analysis: The adjudicating authority proceeded without a reasoned classification of the goods, even though the test data indicated denier and decitex values relevant to the tariff description. The reliance on the earlier Larger Bench view in Nizam Sugar Factory was also misplaced because that view had been set aside by the Supreme Court. On this footing, the demand and the notice could not be sustained.

Conclusion: The demand was unsustainable and the objection based on limitation also succeeded.

Final Conclusion: The impugned order was set aside and the appeal succeeded with consequential relief.

Ratio Decidendi: A demand of excise duty cannot be sustained on the basis of doubtful expert evidence and uncorroborated allegations of manufacture, especially where the goods are not properly classified and the Revenue fails to discharge the burden of proof.

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