Specific tariff classification for demineralised water defeated residual entry demand and penalty.

Demineralised water was treated as classifiable under the specific tariff entry for distilled or conductivity water of similar purity, and where used within the factory of production, under the nil-rated sub-heading. The department's attempt to classify it under the residual sub-heading was rejected because the same commodity had already been placed under the specific entry in the assessee's earlier appeal, and that view was applied to the present dispute. The demand of duty and the related penalty were therefore unsustainable and were set aside.

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Issues: Classification of demineralised water under the tariff schedule and the consequential demand of duty and penalty.

Analysis: Demineralised water had already been held in the assessee's own earlier appeal to fall under the specific entry for distilled or conductivity water of similar purity and, where used within the factory of production, under the nil-rated sub-heading. On that reasoning, the commodity could not be brought under the residual sub-heading invoked by the department. As the present dispute involved the same commodity and the same basis of classification, the earlier view was applied.

Conclusion: The demand of duty and the penalty were unsustainable and were set aside in favour of the assessee.

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