Exemption for CD-ROMs upheld where no sampled evidence showed the goods were outside the notification.

CD-ROMs cleared as containing educational material, journals, periodicals or newspapers were claimed as exempt under Notification No. 6/2006-CE. The department denied exemption on a presumption that the disputed CD-ROMs were video games, but no samples were drawn and no reliable evidence was produced to establish that the goods fell outside the notification. In the absence of sampled or other credible evidence of contents, the denial of exemption could not be sustained and the assessee was entitled to the benefit of doubt. Duty, interest and penalties were therefore set aside, and the assessee obtained complete relief.

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Issues: Whether CD-ROMs cleared by the assessee were entitled to exemption under Notification No. 6/2006-CE dated 01.03.2006 and whether the demand of duty, interest and penalties could be sustained in the absence of sampled evidence of the contents of the goods.

Analysis: The assessee claimed exemption for CD-ROMs containing educational material, journals, periodicals or newspapers under the notification. The department did not draw samples of the goods and proceeded on a presumption that the non-educational CD-ROMs were video games. In the absence of evidence establishing that the disputed CD-ROMs were excluded from the notification, the finding against exemption could not be sustained.

Conclusion: The assessee was held entitled to the benefit of doubt and the demand of duty, interest and penalties was set aside.

Final Conclusion: The appeals of the assessee were allowed and the Revenue's appeal was dismissed, resulting in complete relief to the assessee.

Ratio Decidendi: Where exemption is denied on a presumed classification without sampled or other reliable evidence of the goods' contents, the benefit of doubt must go to the assessee and the demand cannot be sustained.

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