Retrospective duty demand barred where assessee followed departmental classification directions and trade notice despite later contrary classification

Although the goods were ultimately classifiable under Tariff Item 15A(2), the past-period duty demand could not be enforced because the assessee had cleared the goods in accordance with the jurisdictional authorities' directions and the trade notice issued on the basis of Board clarification. The Department had itself directed classification under Tariff Item 22F and told the assessee to stop availing proforma credit, so a retrospective demand for the earlier period was unsustainable. The equitable principle that the State cannot resile from its own representation was applied, and the demand for the disputed period failed.

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Issues: Whether the duty demand for the past period could be confirmed against the assessee when the assessee had cleared the goods in accordance with the departmental trade notice and instructions, even though the product was ultimately held classifiable under Tariff Item 15A(2).

Analysis: The product was held to fall under Tariff Item 15A(2) on merits, following the earlier Tribunal view on the same goods. However, during the relevant period the jurisdictional authorities themselves had directed classification under Tariff Item 22F and had also directed the assessee to stop availing proforma credit. The assessee acted on those directions and on the trade notice issued on the basis of Board's clarification. In these circumstances, the demand could not be enforced retrospectively for a past period when the Department had itself taken and communicated a different stand. The equitable principle preventing the State from resiling from its own representation was applied.

Conclusion: The demand for the disputed period was not sustainable against the assessee, though the goods were classifiable under Tariff Item 15A(2).

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