Prima facie challenge to exemption denial and untested samples justified waiver of pre-deposit and stay of recovery.

Imported goods were sampled but no test report was available, and the Tribunal accepted that this created a prima facie challenge to denial of the exemption claimed under the notification. On that basis, it granted waiver of pre-deposit of differential duty, interest and penalties and stayed recovery during the appeals. The Tribunal also held, at the interim stage, that the extended period of limitation was not invocable because adverse inference could not be drawn merely from research material when the samples had not been tested. The appeals were left to be decided on merits after interim relief.

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Issues: (i) Whether the applicants had made out a prima facie case for waiver of pre-deposit and stay of recovery; (ii) Whether the extended period of limitation was invocable in the absence of test reports.

Issue (i): Waiver of pre-deposit was sought on the ground that samples had been drawn at the time of import and no test report was available to support denial of the concession claimed under the notification. The Tribunal accepted that, at this stage, the material did not justify recovery pending appeal.

Conclusion: The applicants were held entitled to waiver of pre-deposit of the differential duty, interest and penalties, with recovery stayed during the pendency of the appeals.

Issue (ii): The Tribunal found, prima facie, that where samples were drawn but not tested, adverse inference could not be drawn merely on the basis of research material. On that basis, the invocation of the extended period was not justified at the interim stage.

Conclusion: The extended period of limitation was held to be not invocable prima facie.

Final Conclusion: Interim relief was granted and the appeals were left to be decided on merits after waiver of pre-deposit and suspension of recovery.

Ratio Decidendi: Where imported goods have been sampled but not tested, a prima facie challenge to denial of exemption and to invocation of the extended period can justify waiver of pre-deposit and stay of recovery pending appeal.

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