Prima facie limitation barred recovery of central excise duty and penalty in a pending classification dispute.

Recovery of central excise duty and penalty was stayed because the demand was found prima facie barred by limitation at the interim stage. The Department had classified the goods under Chapter 32, while the classification dispute under Chapter 21 was already pending in appellate proceedings. On that limited prima facie assessment, the applicants' contention that the product had necessarily to be classified only under Chapter 21 was not accepted, but the demand was nevertheless treated as time barred for purposes of recovery. Interim coercive recovery was therefore considered inappropriate.

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Issues: Whether recovery of central excise duty and penalty should be stayed on the ground that the demand was prima facie time barred.

Analysis: The goods had been classified by the Department under Chapter 32, while the dispute on classification under Chapter 21 was already subject to appellate consideration. In these circumstances, the applicants' contention that they ought to have classified the product only under Chapter 21 was found, at the prima facie stage, to be unsustainable. On that basis, the demand was regarded as prima facie barred by limitation, making recovery inappropriate at the interim stage.

Conclusion: Recovery of the duty and penalty was stayed on the ground that the demand was prima facie time barred.

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