CESTAT Mumbai grants waiver of duty & penalty for 'Henna Powder' classification case

The Appellate Tribunal CESTAT, Mumbai, allowed the applicant's petition for waiver of pre-deposit of duty and penalty amounting to Rs. 4,26,350 in a case concerning the classification of "Henna Powder" under different chapter headings. The Tribunal found that both lower authorities erred in deviating from the show cause notice and granted a stay on the recovery of duty and penalty until the appeal's final disposal.

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Issues involved: Stay petition against waiver of pre-deposit of duty and penalty, classification of product under different chapter headings.

The Appellate Tribunal CESTAT, Mumbai, in the case, considered the issue of waiver of pre-deposit of duty and penalty amounting to Rs. 4,26,350/-, where the product "Henna Powder" was initially classified under Chapter heading No. 1404, but the show cause notice sought re-classification under Chapter Heading 33059040, and the adjudicating authority classified it under Chapter Heading 33049040. The Commissioner (Appeals) did not address the discrepancy in classification, leading to the Tribunal's observation that both lower authorities erred in going beyond the show cause notice. Consequently, the Tribunal found that the applicant had a prima facie case for complete waiver of pre-deposit of duty and penalty, and thus allowed the application for waiver and stayed the recovery until the appeal's disposal.

In this judgment, the key issue revolved around the classification of the product "Henna Powder" under different chapter headings, specifically Chapter Heading No. 1404, 33059040, and 33049040. The Tribunal noted that the show cause notice sought classification under Chapter Heading No. 3301, while the adjudication order classified it under Chapter 3304. The Tribunal found that both lower authorities had deviated from the show cause notice, leading to the conclusion that the applicant had established a prima facie case for the complete waiver of pre-deposit of duty and penalty. As a result, the Tribunal allowed the application for waiver and stayed the recovery of the duty and penalty until the appeal's final disposal.

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