Exemption under earlier notification preserved despite tariff reclassification and later amendments; demand, interest and penalty failed.

Tariff reclassification into the eight-digit system was treated as revenue-neutral and not as a change meant to alter the existing duty structure. The exemption scheme was read harmoniously with the 2005 substitution notification and the contemporaneous circular to preserve the nil-rate benefit for goods already covered by the earlier notification. The later exclusion in Notification No. 3/2005-CE was held not to extinguish the earlier exemption for the relevant goods, and the rescinding notification protected past clearances and acts done under the earlier notification. The appellant therefore remained entitled to the exemption, and the demand, interest, penalty, and impugned orders were unsustainable.

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Issues: Whether the appellant was entitled to exemption under Notification No. 6/2002-CE despite the tariff reclassification into the eight-digit system and the later notifications issued in 2005 and 2006.

Analysis: The tariff restructuring was treated as a revenue-neutral exercise and not as a change intended to alter the effective duty structure. The exemption scheme had to be read harmoniously with the 2005 substitution notification and the contemporaneous circular so as to preserve the existing nil-rate benefit for goods already covered by the earlier notification. The later exclusion in Notification No. 3/2005-CE was held not to extinguish the earlier exemption for the relevant goods. The rescinding notification also protected past clearances and acts done under the earlier notification.

Conclusion: The appellant remained entitled to the exemption, and the demand, interest, penalty, and the impugned orders were unsustainable.

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