Tariff classification of ball point pen ink follows the Central Excise Tariff over HSN alignment, defeating undervaluation and penalty demands.

Where tariff entries in the Central Excise Tariff were not aligned with the HSN, classification had to be determined from the tariff itself, and ball point pen ink was treated as writing ink under sub-heading 3215.10 rather than other ink under 3215.90; the related undervaluation-based duty demand therefore failed. Allegations of clandestine removal also failed because the Revenue relied on an unreliable comparison of accounts without corroboration from dispatch records, transport documents, sale proceeds, or buyer evidence. With the substantive duty demands unsustainable, the penalties likewise had no independent basis and could not be sustained.

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Issues: (i) Whether ball point pen ink was correctly classifiable under sub-heading 3215.10 as writing ink or under sub-heading 3215.90 as other ink, and whether duty demand based on undervaluation could survive; (ii) Whether the allegation of clandestine removal of inks was established, and whether the penalties could be sustained.

Issue (i): Whether ball point pen ink was correctly classifiable under sub-heading 3215.10 as writing ink or under sub-heading 3215.90 as other ink, and whether duty demand based on undervaluation could survive.

Analysis: The tariff entries under Heading 32.15 in the Central Excise Tariff and the HSN were found not to be aligned. In such a situation, reliance on the HSN for classification was held to be impermissible. The applicable tariff structure treated writing ink separately from other inks, and ball point pen ink was treated as ink used for writing. On that basis, the more specific description was held to govern classification, and the demand founded on classification under the residuary entry and the consequential undervaluation allegation could not stand.

Conclusion: Ball point pen ink was held classifiable under sub-heading 3215.10 and not under sub-heading 3215.90, and the related demand based on undervaluation failed.

Issue (ii): Whether the allegation of clandestine removal of inks was established, and whether the penalties could be sustained.

Analysis: The comparison made by Revenue was found unreliable because the balance-sheet figures covered more than one unit, while the comparison was made only with the clearances of one unit. No supporting investigation was carried out into dispatch particulars, transport records, sale proceeds, or receipt of goods by buyers and dealers. In the absence of such corroboration, the allegation of clandestine removal remained unproved. Once the duty demand on classification and undervaluation also failed, the penalties had no independent basis.

Conclusion: The allegation of clandestine removal was not established, and the penalties were unsustainable.

Final Conclusion: The impugned order was set aside and all the appeals succeeded, with the duty demands and penalties falling together.

Ratio Decidendi: Where the tariff entries are not aligned with the HSN, classification must be determined from the Central Excise Tariff itself, and a charge of clandestine removal must be supported by corroborative investigation and evidence beyond a bare comparison of accounts.

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