Essential character test in classification of Teflon-lined steel pipes led to partial pre-deposit relief, not full waiver.

Classification of steel pipes with Teflon lining turned on whether the essential character of the goods was imparted by the plastic lining or by the steel pipe body. On the materials presented, the dispute was treated as arguable and did not justify complete dispensation from pre-deposit. Partial relief was therefore granted by reducing the deposit requirement and staying recovery of the balance until compliance with the directed payment.

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Issues: Whether the applicant was entitled to complete waiver of pre-deposit in respect of the disputed duty demand, and whether a prima facie case was made out for dispensation under the relevant provisions.

Analysis: The dispute related to classification of steel pipes with Teflon lining, with competing claims as to whether the essential character of the goods was imparted by the plastic lining or by the steel pipe body. On the materials placed, the issue was treated as arguable, and the application for full dispensation was not accepted. The order nevertheless granted partial relief by reducing the pre-deposit requirement and staying recovery of the balance pending compliance.

Outcome: Complete waiver of pre-deposit was declined, and partial dispensation was granted by directing deposit of Rs. 10 lakhs with further proceedings to follow upon compliance.

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