Bona fide tariff classification dispute defeats personal penalties under Rule 26 where no deliberate misdeclaration is shown.

Personal penalties under Rule 26 of the Central Excise Rules, 2002 were found unwarranted where the dispute turned on tariff classification under Chapter 89 and the persons concerned acted under a bona fide belief about the applicable heading. Because the matter involved interpretation of entries and no deliberate misdeclaration was established, the Tribunal deleted the penalties. The High Court found no error in that reasoning and held that no substantial question of law arose from the deletion of personal penalties, so the challenge failed.

---

---

Issues: Whether personal penalties under Rule 26 of the Central Excise Rules, 2002 were warranted in a case turning on interpretation of the tariff classification of the goods.

Analysis: The dispute centred on classification under Chapter 89, and the Tribunal had upheld the classification while finding that the persons concerned acted under a bona fide belief regarding the applicable heading. As the matter involved interpretation of entries and no deliberate misdeclaration was found, the Tribunal held that there was no basis to visit the individuals with penalties. The High Court found no error in that view and held that no substantial question of law arose from the deletion of personal penalties.

Conclusion: The deletion of personal penalties was upheld and the challenge to that part of the Tribunal's order failed.

---