Classification demand beyond show cause notice justified waiver of pre-deposit and stay of duty recovery.

Duty recovery cannot be pursued on a classification not proposed in the show cause notice; where the demand was confirmed under Heading 84.48 although the notice proposed Heading 40.16, the applicants established a strong prima facie case that the confirmed demand was not sustainable on that basis. Waiver of pre-deposit was therefore granted and recovery of the duty stayed pending disposal of the appeal. No final ruling was given on the merits of the classification dispute.

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Issues: Whether waiver of pre-deposit and stay of recovery should be granted where the duty demand was confirmed on a classification different from that proposed in the show cause notices.

Analysis: The demand had been confirmed on the basis of classification under Heading 84.48, whereas the show cause notices had proposed duty demand under Heading 40.16. The settled position relied upon was that recovery of duty under a heading different from that proposed in the notice is not permissible in law. On that basis, the applicants were found to have made out a strong prima facie case for waiver.

Outcome: Waiver of pre-deposit was granted and recovery of the duty was stayed pending disposal of the appeal. No final adjudication on the merits of the classification dispute was made.

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