ORDER
T.K. Jayaraman, Member (T)
1. The issue involved in this appeal is the classification of the polyurethane washers manufactured by the appellants. According to the appellants, the impugned goods are classifiable under Chapter Heading 3921.00 of the CETA, 1985 as Elastomers. However, the Revenue classified them under Chapter Heading 3926.10. If the classification by Revenue is accepted, the appellants should not be entitled for SSI exemption. The Revenue’s contention is based on the test results of the impugned goods. Based on the test results and the opinion of the Indian Institute of Science, the Original Authority demanded a duty of Rs. 6,45,458/- under Proviso to Section 11A(1) of the Central Excise Act, 1944 for the period 1996 to April 2000. Equal penalty was imposed. Interest under Section 11AB was demanded. A penalty of Rs. 30,000/- under Rule 209A was imposed on Shri Shivanand Shenoy Managing Director of the Appellants firm. The Commissioner (Appeals) in the impugned order upheld the order of the Original Authority. The appellants strongly challenge the findings of the lower authorities.
2. Shri Rajesh Chandra Kumar learned Advocate appeared for the appellants and Shri K.S. Bhat learned SDR for the Revenue.
3. The learned Advocate pointed out that when the department wanted to take the samples, the appellants stopped production. Thereafter, the departmental officers took the samples from M/s. IFB Automatic Seatings and Systems Ltd. The Mahazar under which the samples were taken was not relied upon in the show cause notice. Since the Mahazar was not a document relied upon in the show cause notice, the seizure itself was unproved and such seizure was duly questioned by the appellant. Nonetheless, the adjudicating authority relied upon reports/opinions which was based on certain alleged samples said to have been seized. The samples are not proved to be those manufactured by the appellants.
4. The learned SDR reiterated the orders of the lower authorities.
5. We have gone through the records of the case carefully. We find that the demand is in respect of the goods cleared by the appellants during the period 1996-97 to April, 2000. The samples have been seized from a user of the impugned products on 4.9.2000. The demand of duty is based on the test result of the samples taken from the buyer of the impugned goods. Since, the samples have not been drawn in the manufacturers premises and also in view of the fact that the mahazar under which the samples were seized from a premise other than that of the manufacturer has not been relied on in their show cause notice, it would not be correct to decide the classification on the basis of the test result of such a sample. The demand cannot be sustained on such flimsy grounds. In these circumstances, we set aside the impugned order and allow the appeal with consequential relief.
(Operative portion of the order already pronounced in open Court on conclusion of the hearing)