Sample-based duty classification applies only to the represented quantity, and penalty fails absent intent to evade duty.

A sample test of blended yarn was held applicable only to the quantity actually represented by the sampled fibre, because the tops were received and blended in stages and the sample could not reasonably govern the entire lot. Duty classification under Tariff Item 18-B(ii) was therefore confined to the yarn spun from the fibre covered by the sample, not the full quantity manufactured later. Penalty was also found unsustainable where the excess nylon content was accepted as unintentional and there was no intent to evade duty, so the penalty was set aside in full.

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Issues: (i) Whether the test result of a sample drawn from part of the blended yarn could be applied to the entire quantity of yarn manufactured in the lot for the purpose of duty classification under Tariff Item 18-B(ii); (ii) Whether the penalty was sustainable when the increased nylon content was found to be unintentional.

Issue (i): Whether the test result of a sample drawn from part of the blended yarn could be applied to the entire quantity of yarn manufactured in the lot for the purpose of duty classification under Tariff Item 18-B(ii).

Analysis: The sample had been drawn from a running lot in which the constituent tops were being received and blended piece-meal on different dates. The record showed that the total quantity of tops was completed only after later receipts, and the sample drawn on 15.7.1980 could not reasonably be treated as representative of the entire quantity of 2931.300 kgs. The test result could therefore govern only the quantity of blended fibre actually available from which the sample was taken, not the yarn already spun or blended subsequently. The Collector's assumption that the whole lot was represented by the sample was rejected.

Conclusion: The duty demand could not validly be applied to the entire lot and was confined to the yarn spun out of the quantity of blended fibre from which the sample was drawn.

Issue (ii): Whether the penalty was sustainable when the increased nylon content was found to be unintentional.

Analysis: The appellate authority had accepted that the excess nylon content was not intentional and that there was no intention to evade duty. In those circumstances, the basis for imposing penalty did not survive. A penalty could not stand when the factual finding negatived any deliberate contravention or mens rea.

Conclusion: The penalty was set aside in full and was not sustainable.

Final Conclusion: The appeal succeeded in part: the duty demand was restricted to the quantity covered by the sample, and the penalty was annulled.

Ratio Decidendi: A sample test of blended goods can be applied only to the quantity actually represented by the sample, and a penalty cannot be sustained where the excess classification factor is found to be unintentional and without intent to evade duty.

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