Procedural fairness in exemption withdrawal requires disclosure of adverse inspection material and a real chance to respond before final action.

Withdrawal of a customs duty exemption based on adverse inspection findings could not be sustained without first supplying the inspection report and giving the affected party a meaningful opportunity to object and place supporting material before the authority. The HC set aside the withdrawal order for breach of procedural fairness and permitted fresh consideration after hearing the petitioner. The accompanying show cause notice was not quashed, as it merely required a response and no ground for interference was made out at that stage.

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Issues: (i) Whether the order withdrawing the customs duty exemption certificate could be sustained without supplying the inspection report and affording an opportunity of objection and hearing; (ii) whether the show cause notice issued in relation to the withdrawal was liable to be quashed.

Issue (i): Whether the order withdrawing the customs duty exemption certificate could be sustained without supplying the inspection report and affording an opportunity of objection and hearing.

Analysis: The withdrawal of exemption was founded on an inspection report containing adverse factual findings. Since those findings formed the basis of the impugned decision, fairness required that the petitioner be supplied the report and given an opportunity to submit objections and supporting material before any final order was passed.

Conclusion: The withdrawal order could not be sustained in its existing form and was quashed, with liberty to pass a fresh order after considering the petitioner's objections.

Issue (ii): Whether the show cause notice issued in relation to the withdrawal was liable to be quashed.

Analysis: The notice was only a show cause notice and merely called upon the petitioner to respond. No ground was made out to interfere with such a notice at that stage.

Conclusion: The show cause notice was not quashed.

Final Conclusion: The writ petition succeeded only in part: the impugned withdrawal order was set aside, but the proceedings were left open for fresh consideration after observance of procedural fairness.

Ratio Decidendi: A withdrawal of fiscal exemption based on adverse inspection findings cannot be sustained unless the affected person is supplied the material relied upon and given a real opportunity to respond before the final decision.

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