Tyrecord fabric classification under Heading 59.05/59.06 failed; duty demand was sent back and penalty fell away.

Calendered nylon/rayon tyrecord fabric was treated as covered by the settled Tribunal view on similar tyrecord fabrics and classified under Heading 59.05, now 59.06, rather than the heading adopted in the demand. The classification in the impugned order was not sustained, so the duty liability was required to be worked out afresh under the correct heading. Because the matter succeeded on merits, the limitation objection was not examined. Once the substantive classification and demand were set aside for redetermination, the penalty could not survive and was also set aside.

---

---

Issues: Whether the calendered nylon/rayon tyrecord fabric was correctly classifiable under Heading 59.05/59.06 of the Central Excise Tariff Act, 1985, and whether the duty demand and penalty could be sustained.

Analysis: The product was held to be covered by the settled Tribunal view on similar tyrecord fabrics and was to be classified under Heading 59.05, now 59.06, rather than under the heading adopted in the demand. On that basis, any duty liability had to be worked out afresh according to the correct classification. As the appeal succeeded on merits, the objection regarding limitation was not examined. The penalty order could not survive once the substantive classification and demand were set aside for fresh determination.

Conclusion: The classification adopted in the impugned order was not sustained, the duty demand was set aside for redetermination in accordance with law, and the penalty was also set aside.

---