Bona fide classification mistake defeats duty demand where contemporaneous records support exemption eligibility and wrong invoice entry was inadvertent.

A bona fide tariff classification mistake in invoices did not sustain the duty demand where the assessee's contemporaneous records showed that 8% of the value was debited at clearance and the goods were otherwise eligible for exemption under Notification No. 8/96-C.E. The Tribunal treated the wrong invoice classification as inadvertent, accepted the explanation that the cleared goods fell within the exemption, and held that a demand based only on the incorrect classification could not stand. The consequential penalty also failed, and the impugned order was set aside.

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Issues: Whether the duty demand and penalty were sustainable when the goods were mistakenly classified in the invoices, but the assessee had debited 8% of the value at clearance and claimed exemption under the applicable notification.

Analysis: The assessee manufactured goods falling under more than one tariff sub-heading and the record showed that, for the disputed clearances, 8% of the value had been debited at the time of removal. That conduct was treated as supporting the explanation that the wrong tariff classification was shown by mistake while the goods cleared were those eligible for exemption under Notification No. 8/96-C.E. The Tribunal accepted this explanation and found the demand unsustainable.

Conclusion: The duty demand and the penalty were not sustainable.

Final Conclusion: The assessee succeeded in challenging the demand and consequential penalty, and the impugned order was set aside.

Ratio Decidendi: Where the contemporaneous record supports a bona fide classification mistake and the goods cleared are otherwise eligible for the exemption claimed, a duty demand based solely on the incorrect invoice classification cannot be sustained.

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