Natural justice in excise classification demands: chemical report must be disclosed and challenged before duty is fastened.

An excise classification demand treating paint oil as "varnish" could not be sustained where the department relied on a chemical examiner's report without supplying it in time or giving the assessee a meaningful chance to object. The court emphasised that, in a quasi-judicial duty determination, the authority must disclose the material relied on and allow an effective opportunity to contest it, including seeking re-test or counter-test where feasible, especially when only one sample was taken and exhausted. The demand was therefore invalid for breach of natural justice and was set aside in favour of the assessee.

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Issues: Whether the excise demand on the ground that the petitioner's paint oil fell within the excisable entry 'varnish' could be sustained without furnishing the chemical examiner's report and giving the petitioner an effective opportunity to contest the classification.

Analysis: The demand was based on a chemical examiner's report obtained after the department itself entertained doubt about the classification of the product. The petitioner was not furnished the report in time, was not called upon to offer objections before the demand was raised, and was not given a meaningful chance to seek re-test or counter-test, particularly since only one sample had been taken and it had been exhausted for analysis. In a quasi-judicial determination affecting duty liability, the authority was required to disclose the material relied upon and afford a fair opportunity to meet it before fastening liability.

Conclusion: The demand was invalid for violation of natural justice and could not be sustained; the issue is decided in favour of the assessee.

Ratio Decidendi: A duty demand based on disputed expert material in a quasi-judicial excise classification matter cannot stand unless the assessee is supplied the report and afforded a real opportunity to challenge it, including by re-test where feasible.

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