Central Excise classification of Beta Naphthol under Item 68 defeats demand based on Item 14D

Beta Naphthol was treated as classifiable under Item 68 rather than Item 14D of the Central Excise Tariff, and the Department's later acceptance of that classification, reinforced by trade notices and departmental practice, undermined the earlier contrary approach. On that basis, the demand notice founded on Item 14D could not be sustained, and duty recovered under that classification was refundable to the assessees.

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Issues: Whether Beta Naphthol was classifiable under Item 14D of the Central Excise Tariff or under Item 68, and whether the demand raised on the basis of Item 14D could be sustained.

Analysis: The Department itself had subsequently accepted that Beta Naphthol was assessable under Item 68 and not under Item 14D, and trade notices as well as departmental practice reflected that position. In view of that accepted classification, there was no justification for continuing to treat the product differently at earlier points of time and sustain the contrary view adopted by the excise authorities. The demand notice founded on Item 14D therefore could not stand, and the petitioners were entitled to refund of duty recovered on that basis.

Conclusion: Beta Naphthol was not excisable under Item 14D on the footing adopted by the authorities, and the petition succeeds in favour of the petitioners.

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