Tariff classification and duty demand fail where the notice omits the heading and the goods fall under a nil-duty entry.

Printed scarves that were identifiable as finished, ready-to-use articles were treated as falling under Heading 62.02 and therefore attracting nil duty. The demand for excise duty and the connected confiscation and penalties could not be sustained because neither the show cause notice nor the appeal specified the tariff heading or rate under which duty was proposed, leaving the basis of the demand unformed. The department also did not identify any alternative dutiable entry, while accepting that no duty would arise if Heading 62.02 applied. The classification in favour of nil duty was therefore maintained and the demand proceedings lacked legal foundation.

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Issues: Whether the goods manufactured by the assessee were classifiable under Heading 62.02 as made-up articles attracting nil rate of duty, and whether the demand of duty and consequential penalties could stand when the notice and appeal did not specify the tariff heading under which duty was sought to be levied.

Analysis: The appellate authority found that the printed scarves were clearly identifiable, could be obtained by cutting along the demarcated lines, and were used only as scarves, bringing them within Heading 62.02. In Revenue appeal, it was noted that the department did not dispute that nil duty would apply if the goods fell under Heading 62.02, but it also could not indicate any alternative tariff entry under which the goods were liable. Since neither the show cause notice nor the appeal specified the tariff heading or rate of duty proposed, the very foundation of the demand was missing.

Conclusion: The classification in favour of nil duty was sustained and the demand proceedings were held to be without legal basis.

Final Conclusion: The Revenue failed to establish any sustainable basis for duty demand or the consequential confiscation and penalties, so the assessee's relief remained intact.

Ratio Decidendi: A demand of excise duty cannot be sustained where the department does not specify the tariff heading or rate under which the goods are alleged to be dutiable, and the goods are otherwise shown to fall within a nil-duty classification.

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