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Issues: (i) Whether spares for pressure cookers were classifiable under the tariff entry for complete pressure cookers or under the residuary entry for other articles, and whether the duty demand raised under Rule 9(2) of the Central Excise Rules, 1944 read with Section 11A of the Central Excise Act, 1944 was sustainable; (ii) Whether penalty was exigible.
Issue (i): Whether spares for pressure cookers were classifiable under the tariff entry for complete pressure cookers or under the residuary entry for other articles, and whether the duty demand raised under Rule 9(2) of the Central Excise Rules, 1944 read with Section 11A of the Central Excise Act, 1944 was sustainable.
Analysis: The lower appellate authority had accepted the Revenue's stand that the goods were not complete pressure cookers and therefore did not fall under the entry for complete pressure cookers. Once that finding was reached, the notice invoking Rule 9(2) read with Section 11A supported the duty demand, and the mere fact that the removals were within the knowledge of the department did not justify dropping the demand.
Conclusion: The duty demand was upheld and the order dropping it was set aside.
Issue (ii): Whether penalty was exigible.
Analysis: The demand was within the normal period of limitation and a declaration had been filed by the assessee. On those facts, penalty was not called for.
Conclusion: Penalty was not imposed.
Final Conclusion: The appeal succeeded to the extent that the duty demand was restored, while penalty relief was maintained in favour of the assessee.
Ratio Decidendi: Where the classification dispute is resolved against the assessee, a demand supported by a notice under Rule 9(2) read with Section 11A is sustainable, but penalty may still be denied if the demand is within limitation and disclosure has been made.
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