Classification of polyethylene glycol products under Chapter 29 defeats duty demand and penalties based on Chapter 39 treatment.

Polyethylene glycol products such as PEG 300, PEG 400 and PEG 600 were treated as classifiable under Chapter 29 of the Central Excise Tariff Act, 1985 rather than as plastics under Chapter 39. A prior Tribunal view on the same product line was followed, and no reason was found to depart from it. Once the Chapter 29 classification was accepted, the alleged misclassification under Chapter 39 and the related wrongful declaration could not survive. Penalties imposed on the Director and under Rule 109A of the Central Excise Rules also lost their basis, and the duty demand and penalty orders were set aside with consequential relief.

---

---

Issues: Whether polyethylene glycol products, including PEG 300, PEG 400 and PEG 600, were classifiable under Chapter 29 of the Central Excise Tariff Act, 1985 or under Chapter 39, and whether the penalties and duty demands based on the contrary classification could survive.

Analysis: A prior Tribunal decision concerning polyethylene glycol products had already held that such goods fell under Chapter 29 and not as plastics under Chapter 39. No contrary reason was shown for departing from that view. Once the correct classification of PEG 300, PEG 400 and PEG 600 was accepted under Chapter 29, the findings of misclassification under Chapter 39 and the related allegations of wrongful declaration could not stand. The penalties imposed on the Director and under Rule 109A of the Central Excise Rules also ceased to have any basis.

Conclusion: The products were held classifiable under Chapter 29. The duty demand, penalty orders and the impugned orders were set aside, with consequential relief, in favour of the assessee.

Ratio Decidendi: Polyethylene glycol products such as PEG 300, PEG 400 and PEG 600 are classifiable under Chapter 29 and not Chapter 39, and penalties founded solely on the incorrect classification cannot survive once that classification is rejected.

---