Exported finished goods with accepted export evidence escape duty demand, and related penalty cannot survive without duty liability.

Modified Tamarind Kernel Powder was held classifiable under heading 1302.3900 in Chapter 13, as the product fit the relevant tariff description and earlier Tribunal reasoning on the same commodity was followed. Duty and interest on the cleared quantity were unsustainable because the entire goods were exported and the export evidence was accepted; no duty arose on such exported finished goods. Penalty under Rule 25 also failed because it depended on a surviving duty liability, and once the duty demand was set aside, the penalty basis disappeared.

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Issues: (i) Whether Modified Tamarind Kernel Powder was classifiable under Chapter 13 of the Central Excise Tariff. (ii) Whether duty and interest could be demanded on the quantity cleared from the factory when the goods were exported and export evidence was accepted. (iii) Whether penalty could be sustained once no duty liability survived.

Issue (i): Whether Modified Tamarind Kernel Powder was classifiable under Chapter 13 of the Central Excise Tariff.

Analysis: The classification issue turned on the nature of the product and the earlier Tribunal decision on the same commodity. The product was held to fall under heading 1302.3900, and the lower authorities' classification was found to be in accordance with that .

Conclusion: The classification under Chapter 13 was upheld, against the assessee.

Issue (ii): Whether duty and interest could be demanded on the quantity cleared from the factory when the goods were exported and export evidence was accepted.

Analysis: The record showed that the entire quantity in question had been exported and that the documentary evidence of export had been accepted. Where finished goods are exported, duty demand on such goods does not arise.

Conclusion: The demand of duty and interest was unsustainable and was set aside in favour of the assessee.

Issue (iii): Whether penalty could be sustained once no duty liability survived.

Analysis: Penalty depended on the existence of duty liability. Since no duty could be fastened on the assessee for the exported goods, the basis for penalty under Rule 25 did not survive.

Conclusion: The penalty was set aside in favour of the assessee.

Final Conclusion: The product classification was upheld, but the duty, interest, and penalty demands were quashed because the goods had been exported and no duty liability remained on that account.

Ratio Decidendi: Exported finished goods, when supported by accepted export evidence, are not subject to duty demand, and penalty cannot survive in the absence of duty liability.

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