Clandestine manufacture allegations need cogent evidence, while unsupported classification disputes require fresh adjudication on the record.

Allegations of clandestine manufacture or removal require cogent evidence, including support from machinery, raw materials, and corroborative records; on the material described, the CERA Polycure W demand was set aside. The classification dispute under Chapter 32.14 was not supported by adequate reasoning in the lower orders, so fresh adjudication was directed. The demand relating to 18 products said to have been returned to the depot and later sold on commercial invoices was also remanded for de novo consideration, with an opportunity to produce additional evidence on prior duty discharge.

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Issues: (i) Whether CERA Polycure W was manufactured by the appellants or merely traded by them; (ii) whether the appellants' products were classifiable under Chapter 32.14; (iii) whether duty could be demanded on 18 products said to have been returned to the depot and later sold on commercial invoices.

Issue (i): Whether CERA Polycure W was manufactured by the appellants or merely traded by them.

Analysis: The demand rested on an allegation of manufacture without adequate supporting evidence. The record did not show convincing proof of necessary machinery, use of raw materials, or other corroboration to establish manufacture and removal. The same defects were noticed in a later order for a subsequent period on the identical dispute, reinforcing the absence of reliable evidence for the earlier period as well.

Conclusion: The issue was answered in the negative and the demand relating to CERA Polycure W was set aside.

Issue (ii): Whether the appellants' products were classifiable under Chapter 32.14.

Analysis: The lower orders did not contain adequate discussion or analysis showing why the goods could not be classified under the classification proposed by the appellants. Since the classification dispute directly affected the duty liability, a fresh examination with proper reasoning was necessary.

Conclusion: The classification issue was remanded for fresh adjudication.

Issue (iii): Whether duty could be demanded on 18 products said to have been returned to the depot and later sold on commercial invoices.

Analysis: The findings below lacked sufficient discussion and evidentiary analysis to sustain the conclusion against the appellants. The appellants were to be given an opportunity to produce additional evidence and establish that duty had already been discharged on the goods in question.

Conclusion: The issue was remanded for de novo adjudication.

Final Conclusion: The appeal succeeded on the first issue, while the classification and sales-return related disputes were sent back for fresh decision on merits.

Ratio Decidendi: Allegations of clandestine manufacture or removal must be supported by cogent evidence, and a classification or duty dispute cannot be sustained without a reasoned analysis of the material on record; where such analysis is absent, remand for fresh adjudication is appropriate.

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