Final tariff classification controls excise duty liability; non-recovery from customers does not waive differential duty.

Tarpaulin classification under the Central Excise tariff was treated as settled under sub-heading 3926.90 rather than heading 6306.00, and that final determination could not be reopened. On that basis, differential excise duty remained payable as a statutory consequence, even though the assessee had changed its classification and had not recovered duty from customers. The text notes that inconsistent departmental stands and non-recovery may support relief from penalty, but not waiver of duty where the product is held dutiable under the applicable classification. Penalty had already been waived, and the appeal failed on classification and duty.

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Issues: (i) Whether the tarpaulin manufactured by the appellant was classifiable under sub-heading 3926.90 or under heading 6306.00; (ii) Whether differential duty was payable despite the appellant's change of classification and non-recovery of duty from customers, and whether penalty could be sustained.

Issue (i): Whether the tarpaulin manufactured by the appellant was classifiable under sub-heading 3926.90 or under heading 6306.00.

Analysis: The classification controversy had already been settled against the appellant in earlier proceedings, and that determination had attained finality. In view of that concluded position, the appellant could not reopen the claim that the product was outside sub-heading 3926.90. The Tribunal's reliance on the earlier classification ruling was therefore justified.

Conclusion: The tarpaulin was held classifiable under sub-heading 3926.90, not under heading 6306.00, against the appellant.

Issue (ii): Whether differential duty was payable despite the appellant's change of classification and non-recovery of duty from customers, and whether penalty could be sustained.

Analysis: A contradictory stand taken by the department and the appellant's non-recovery of duty from customers could justify relief in penalty, but not waiver of statutory duty once the product was held dutiable under the applicable classification. The Court treated waiver of duty as a matter dependent on exemption and found no basis to relieve the appellant from the differential duty. The penalty, however, had already been waived.

Conclusion: Differential duty remained payable, while penalty was not leviable.

Final Conclusion: The classification finding and the consequential duty demand were upheld, and the appeal failed.

Ratio Decidendi: Once the product's classification under the applicable tariff entry has attained finality, differential excise duty follows as a statutory consequence and cannot be waived merely because the assessee did not collect the duty from customers or because the department had taken inconsistent stands.

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