Bona fide tariff classification dispute prevents penalty where there is no suppression or deliberate misstatement.

Penalty was not sustainable where the assessee had claimed assessment under a particular tariff classification in a bona fide manner and the classification dispute remained unresolved. The goods were described in the classification list as Grey Board/Deluxe Grey Board, while the department treated them as Duplex Board, but the earlier remand showed that the issue had not been finally settled and the description was not proved to be deliberately false. In the absence of suppression or deliberate misstatement, a mere claim to a lower rate of duty did not justify penalty, and the penalty was set aside.

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Issues: Whether penalty could be sustained where the assessee had described the goods under a claimed tariff classification bona fide and the classification dispute was still pending.

Analysis: The assessee had filed a classification list claiming assessment at the rates applicable to Grey Board/Deluxe Grey Board, while the department treated the goods as Duplex Board. The classification controversy was not finally settled and had already been remanded earlier, indicating that the description adopted by the assessee was not shown to be deliberately false. In such circumstances, a mere claim to a particular rate of duty, without suppression or deliberate misstatement, did not justify penalty.

Conclusion: Penalty was not sustainable and was set aside.

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