Classification under Item 18E bars an Item 68 demand on full value, and notice-beyond-order liability cannot stand.

Polyester-viscose resultant yarns were accepted as correctly classifiable under Item 18E of the First Schedule to the Central Excises and Salt Act. On that footing, a demand under Item 68 on the full value of the goods was untenable. A further finding that duty was recoverable on the constituent yarns could not stand because it travelled beyond the show cause notice and the adjudication order. Any amount actually collected under the unsustainable demand was liable to be refunded.

---

---

Issues: (i) Whether the resultant yarns of the specified polyester-viscose compositions were classifiable under Item No. 18E of the First Schedule to the Central Excises and Salt Act; (ii) Whether duty could be demanded under Item No. 68 on the full value of the goods and whether recovery on the constituent yarns or refund of duty paid under Item No. 18E was sustainable.

Issue (i): Whether the resultant yarns of the specified polyester-viscose compositions were classifiable under Item No. 18E of the First Schedule to the Central Excises and Salt Act.

Analysis: The classification of the resultant yarns was accepted as correct under Item No. 18E. Since the department did not dispute that position before the Tribunal, the classification reached by the lower appellate authority was not shown to be erroneous.

Conclusion: The resultant yarns were correctly classifiable under Item No. 18E of the First Schedule to the Central Excises and Salt Act.

Issue (ii): Whether duty could be demanded under Item No. 68 on the full value of the goods and whether recovery on the constituent yarns or refund of duty paid under Item No. 18E was sustainable.

Analysis: Once the goods were held classifiable under Item No. 18E, recourse to Item No. 68 for assessment on the full value of the goods was untenable. The further finding that duty was recoverable on the constituent yarns travelled beyond the show cause notice and the adjudication order and therefore could not be sustained. In the circumstances, the question of excess payment under Item No. 18E did not arise, except that any amount actually collected pursuant to the unsustainable demand had to be returned.

Conclusion: The demand under Item No. 68 and the finding on constituent yarns were not sustainable, and any amount recovered under the impugned demand was liable to be refunded.

Final Conclusion: The appeal succeeded to the extent that the demand based on Item No. 68 and the ancillary recovery on constituent yarns were set aside, while the classification under Item No. 18E was upheld, with refund directed if duty had been collected under the unsustainable demand.

Ratio Decidendi: Where goods are accepted as falling under the appropriate tariff item, a demand under a different item on the full value of the goods is not maintainable, and a finding imposing liability on a basis not covered by the notice or adjudication cannot stand.

---