Classification by essential character sustained under Tariff Item 26A, and penalty failed absent deliberate evasion.

Goods that continued to retain their essential character remained classifiable under Tariff Item 26A, as the later insertion of Tariff Item 68 did not by itself warrant reclassification where the departmental view had consistently treated the goods under Item 26A. The revision also noted that the goods had been cleared under a bona fide belief that they were covered by exemption Notification No. 118/66. On those facts, the levy of penalty could not be sustained because there was no deliberate evasion. The operative result was classification under Tariff Item 26A, not Tariff Item 68, with penalty set aside.

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Issues: Whether the goods were classifiable under Tariff Item 26A or Tariff Item 68, and whether the levy of penalty could be sustained.

Analysis: The goods had earlier been treated by the department as falling under Tariff Item 26A, and the insertion of Tariff Item 68 did not alter their essential character. The revision application also proceeded on the basis that the goods were cleared under a bona fide impression that they were covered by exemption Notification No. 118/66. On the facts, the goods were held to remain within Tariff Item 26A rather than being shifted to Tariff Item 68. In the absence of deliberate evasion, the penalty imposed on the applicants could not stand.

Conclusion: The goods were classifiable under Tariff Item 26A and not Tariff Item 68, and the penalty was not sustainable.

Ratio Decidendi: Where goods retain the same character and the departmental view has consistently treated them under a particular tariff entry, a later insertion of another tariff item does not justify reclassification unless the goods truly answer to the new entry; penalty cannot be sustained in the absence of deliberate evasion.

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