Prima facie tariff classification of absorbent cotton wool sustained; total pre-deposit waiver refused, with partial deposit directed.

Absorbent cotton wool was found in retail packing, marked to I.P. standards, and used for medical purposes, so the Tribunal held that a prima facie classification under Heading 3005 could not be rejected at the interim stage. On that basis, total waiver of pre-deposit was refused in respect of the duty demand. The plea of limitation was not finally decided and was treated as a mixed question of fact and law for the appeal hearing. The applicant was directed to deposit Rs. 10 lakhs within eight weeks, with waiver of the remaining duty and penalty on compliance.

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Issues: Whether absorbent cotton wool was, for the purpose of waiver of pre-deposit, prima facie classifiable under Heading 3005 of the Central Excise Tariff rather than under Heading 5601, and whether the demand raised against the applicant warranted total waiver.

Analysis: The products were examined in sample form. The absorbent cotton wool was found to be in retail packing and marked as per I.P. standards, and the material placed before the Tribunal indicated that it was used for medical purposes. On that basis, the Tribunal formed a prima facie view that the revenue's classification under Heading 3005 could not be rejected at the interim stage. The plea of limitation was not finally decided and was treated as a mixed question of fact and law to be considered at the hearing of the appeal.

Conclusion: The Tribunal declined total waiver of pre-deposit in respect of the absorbent cotton wool demand and directed deposit of Rs. 10 lakhs within eight weeks, with waiver of the remaining duty and penalty on such deposit.

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