Procedural lapse in classification list cannot defeat excise exemption absent suppression or ineligibility on merits

Exemption from central excise duty could not be denied merely because physician's free samples were not specifically mentioned in the classification list, where the exemption claim had been disclosed in RT-12 returns and accepted by the assessing officer. Non-declaration in the classification list was treated as a procedural lapse under Rule 173B and did not defeat exemption when the notification conditions were otherwise satisfied. The extended limitation period was also unavailable because the notice did not allege clandestine removal or wilful suppression, and the record showed no suppression of facts. The demand was therefore unsustainable on merits and on time-bar grounds.

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Issues: Whether exemption from duty could be denied merely because physician's free samples were not specifically mentioned in the classification list, and whether the extended period could be invoked in the absence of suppression of facts.

Analysis: The claim for exemption under the notification had been disclosed in the RT-12 returns, accepted by the assessing officer, and assessed on that basis. The show cause notice did not allege that the goods were ineligible for exemption on merits, nor did it allege clandestine removal or wilful suppression. Rule 173B of the Central Excise Rules requires declaration of goods for classification purposes, but non-declaration in the classification list is only a procedural lapse and cannot by itself defeat exemption when the conditions of the notification are otherwise satisfied. On the facts, there was no basis for alleging suppression or for invoking the extended period.

Conclusion: Denial of exemption on the sole ground of non-mention in the classification list was unsustainable, and the demand could not be upheld on time-bar or suppression grounds. The appeal was allowed in favour of the assessee.

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