DEPB classification of Surimi as a fish product prevailed after DGFT clarification, defeating customs demand, interest and penalty.

Classification of Surimi under the DEPB Rate Schedule was treated as a fish product falling under Sr. No. 2/66, based on the DGFT's specific clarification in the assessee's case. That clarification also withdrew the show cause notice on the same issue, leaving no basis for the departmental view to prevail over the policy interpretation. On that footing, the article states that customs demand, interest and penalty could not be sustained and the impugned order was set aside.

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Issues: Whether the export product "Surimi" was entitled to DEPB benefit under Sr. No. 2/66 of the DEPB Rate Schedule and whether the customs demand, interest and penalty could survive in the face of the DGFT's clarification and withdrawal of the show cause notice.

Analysis: The dispute turned on the proper classification of "Surimi" in the DEPB schedule. The DGFT had specifically clarified, in the appellant's case, that "Surimi" was a fish product falling under Sr. No. 2/66 and not under Sr. No. 1, and further withdrew the show cause notice issued on the same issue. In these circumstances, the earlier departmental view could not override the DGFT's policy clarification, and the adjudicating authority had no basis to disregard that decision while confirming recovery, interest and penalty.

Conclusion: The demand of duty, interest and penalty was held unsustainable and the impugned order was set aside in favour of the assessee.

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