Exemption for demagnetised hard ferrite pieces upheld where goods were intended to function as permanent magnets.

Hard ferrite pieces removed in demagnetised condition for transport, but intended to be used as permanent magnets under Heading 85.05, were treated as covered by the relevant exemption notification and the notification issued under Section 11C. On that basis, the Tribunal found the goods not liable to duty or penalty, and the demand and penalty were set aside.

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Issues: Whether hard ferrite pieces removed in demagnetised condition and intended for use as permanent magnets were covered by the exemption notification and the notification issued under Section 11C, so as to escape duty and penalty.

Analysis: The Tribunal noted that the goods were demagnetised only for transportation and were intended to become permanent magnets falling under Heading 85.05. It also relied on the notification issued under Section 11C and the exemption notification to hold that the goods were covered by the relevant exemption scheme.

Conclusion: The goods were held not liable to duty or penalty, and the demand and penalty were set aside.

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