Judgment:
1. Both the stay application and the appeal involve in consideration of the same issue, which fall within a short compass and hence the appeal itself was taken up for disposal.
2. The appeal is against the Order-in-Original No. V-Adj. (Ch.
30)15-43/92/3426, dated 2-6-1993 of Collector of Central Excise, Bombay-II.3. Facts of the case are that the appellants filed two classification lists No. 23 and 26 dated 5-8-1991 and 12-8-1991 respectively claiming benefit of Notification No. 29/88, dated 1-3-1988. The undisputed fact is that these classification lists are yet to be approved and a Show Cause Notice has been issued to the appellants only on 14-6-1993.
4. In other words, the classification lists are yet to be approved and in the light of the Supreme Court decision in Samrat International [AIR 1991 SC 369] the assessments are still provisional. However, during the pendency of the approval of the classification list, they have cleared these medicines availing of the benefit of the aforesaid notification and on the Department objecting to that, even before approval of the classification list, they paid the entire duty. All the same, penal proceedings were initiated by the Collector on the ground that they have cleared the goods without approval of the classification list, availing exemption and hence notwithstanding the fact that they have paid the differential duty, they are liable to penalty and hence imposed a penalty of Rs. 25,000/-. The present appeal is against the aforesaid imposition of penalty.
5. After hearing both the sides, I find that the undisputed factual position is that the classification lists are yet to be approved. Hence the assessments are to be deemed to be provisional, as per the Supreme Court judgment cited above. If they had paid the duty on account of department's insistence, such payment is pending finalisation of classification lists and that cannot be held against them as any deliberate violation of the Rules. On the contrary it indicates their obedience to the department's instructions. Hence I find no reason for invoking the penal provisions. The order of penalty is therefore set aside. The department is at liberty to finalise the classification lists and seek to confirm the demand for the duty already paid, if on finalisation of the classification lists, the appellant is not eligible for exemption. It is also needless to say that the finalisation of the classification lists should be done by following the principles of natural justice and also after due hearing the assessee.