Correct classification under tariff headings preserved small-scale exemption and defeated the duty demand.

Monitors and keyboards were correctly classifiable under Heading 84.71, so the department could not deny exemption by reclassifying them under Heading 84.73. The exemption under Notification No. 175/86-C.E. depended on clearances under the relevant tariff headings, and the department's computation was also defective because it counted switch mode power supply under a heading different from its approved classification. On either basis, the clearances did not cross the applicable limit, leaving the appellant entitled to the notification benefit and rendering the duty demand unsustainable.

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Issues: Whether the appellant was entitled to exemption under Notification No. 175/86-C.E. on the basis of the correct classification of monitors and keyboards, and whether the duty demand could survive on the classification adopted by the department.

Analysis: Monitors and keyboards were held to be correctly classifiable under Heading 84.71, and the department could not sustain the demand by treating them as falling under Heading 84.73. The notification granted exemption with reference to clearances under separate tariff headings, and the department's calculation was also found to be inconsistent because it included switch mode power supply under a heading different from its approved classification. On either basis, the clearances did not exceed the relevant limit so as to deny the exemption.

Conclusion: The appellant was entitled to the benefit of the notification, and the duty demand was unsustainable.

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