Natural justice requires supply of relied-upon report before denying exemption for alleged failure to meet value addition conditions.

Denial of exemption for alleged failure to achieve required value addition could not stand where the department relied on a Development Commissioner's report that was not supplied to the appellant. Withholding the report deprived the appellant of a fair opportunity to meet the case against it and amounted to a breach of natural justice. The appellant's failure to file a reply before the Commissioner did not cure that defect. The matter had to be reconsidered only after the report was furnished and the appellant was heard.

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Issues: Whether denial of exemption on the ground of failure to achieve the required value addition could be sustained when the report relied upon by the department was not supplied to the appellant.

Analysis: The demand was founded on a report of the Development Commissioner, but that report was neither enclosed to the notice nor otherwise made available to the appellant. Denial of access to the material relied upon to reject the exemption claim deprived the appellant of a fair opportunity to meet the case against it. The circumstances showed a breach of the principles of natural justice, and the appellant's failure to file a reply before the Commissioner did not cure that defect.

Conclusion: The denial of exemption could not be sustained and the matter had to be reconsidered after supplying the report and hearing the appellant.

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