Approved classification list does not bar differential duty when the declared duty rate under an exemption notification is wrong.

Where exemption under Notification No. 175/86-C.E. is admitted, an approved classification list does not prevent recovery of differential duty if it incorrectly states the applicable rate. The text distinguishes a demand that merely corrects the duty rate shown in the approved list from one that challenges the approval of the classification list itself. Because the classification of the goods and availability of the exemption were not disputed, the wrong rate could be corrected by demand of the differential duty. The principle protecting an approved classification list applies only when the approval itself is under challenge.

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Issues: Whether differential duty could be demanded where the classification list, though approved, incorrectly mentioned the rate of duty under Notification No. 175/86-C.E., and whether the principle applicable to an approved classification list barred such demand.

Analysis: The classification list was approved only for the small scale exemption under Notification No. 175/86-C.E.; however, the rate of duty shown in the list was 5% when, under the notification, the payable rate was 10%. The demand did not challenge the classification of the goods or the availability of the exemption itself. It merely corrected the wrong rate shown in the approved list. A demand based on correction of the applicable rate under the notification is different from a demand questioning the approval of the classification list. The principle protecting an approved classification list applies only when the approval itself is put in issue.

Conclusion: The differential duty demand was valid, and the principle relating to approved classification lists did not bar recovery. The appeal fails.

Ratio Decidendi: Where exemption under a notification is admitted, a wrong rate of duty shown in an approved classification list can be corrected by demand of the differential duty, and such demand is not barred unless the approval of the classification list itself is under challenge.

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