Classification of PU foam sheets under Chapter 39 justified waiver of pre-deposit and stay of duty recovery.

PU foam sheets and allied products cut only into rectangular or specified dimensions were treated as goods remaining classifiable under Chapter 39, because Note 10 covers plates, sheets and blocks merely cut into regular geometric shapes without further working. The classification guidance distinguishing such cut foam sheets from mattresses under Heading 94.04 supported that view. On that basis, a strong prima facie case was found in the classification dispute, and waiver of pre-deposit was justified. Recovery of the demanded central excise duty was stayed during the pendency of the appeal.

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Issues: Whether the applicant had made out a prima facie case for waiver of pre-deposit and stay of recovery of the demanded central excise duty on the classification dispute relating to PU foam sheets and allied products.

Analysis: The products were claimed to fall under Chapter 39 as sheets and blocks of regular geometric shape, not further worked beyond cutting into rectangles or specific dimensions. Note 10 to Chapter 39 was relied upon to show that plates, sheets and blocks merely cut into rectangles remain classifiable under Chapter 39 even if ready for use. Support was also drawn from the classification advice of the Nomenclature and Classification Directorate, which distinguished such cut foam sheets from mattresses falling under Heading 94.04.

Conclusion: The applicant established a strong prima facie case. Recovery of the entire duty demand was stayed during the pendency of the appeal, in favour of the appellant.

Ratio Decidendi: Goods remaining unworked except for cutting into regular shapes or rectangles retain classification under Chapter 39, and such a prima facie classification dispute can justify waiver of pre-deposit and stay of recovery.

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