Natural justice, sampling validity and extended limitation govern excise demand where test results were disclosed and misstatement was found.

Non-supply of a formal chemical test report did not amount to denial of natural justice where the test result was communicated and could be contested. A private laboratory report was not binding on the Department because the sample was not drawn in the presence of Central Excise and therefore lacked proper authorisation for dispute resolution. The demand was held within limitation because the classification remained provisional under Rule 9B, and the incorrect fibre-composition declaration was treated as a misstatement made with intent to evade duty. The duty demand was sustained and the assessee's challenge failed on all substantive grounds.

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Issues: (i) Whether non-supply of the test report caused denial of natural justice. (ii) Whether the private laboratory test of the sample, drawn without the presence of Central Excise , could be relied upon. (iii) Whether the demand was barred by limitation or the extended period applied on account of misstatement and provisional assessment.

Issue (i): Whether non-supply of the test report caused denial of natural justice.

Analysis: The contents of the chemical test result had been communicated to the appellant, even though a formal copy of the report had not been forwarded. The appellant was therefore aware of the basis of the departmental action and had the opportunity to contest the result.

Conclusion: There was no denial of natural justice on this ground.

Issue (ii): Whether the private laboratory test of the sample, drawn without the presence of Central Excise , could be relied upon.

Analysis: For sampling in a dispute between the Department and the assessee, the sample had to be drawn in the presence of both sides. As the sample tested by the private institution was not drawn in the presence of Central Excise , it could not be treated as an authorised sample, and its result could not bind the Department.

Conclusion: The private test report was not acceptable as binding evidence against the Department.

Issue (iii): Whether the demand was barred by limitation or the extended period applied on account of misstatement and provisional assessment.

Analysis: The revised classification was only provisionally approved under Rule 9B of the Central Excise Rules, 1944, and the declaration regarding fibre composition was found to be incorrect. On the facts, the misstatement was held to be with intent to evade duty, and in any event the material period was covered by provisional assessment, leaving no limitation bar.

Conclusion: The extended period was applicable and the demand was not time-barred.

Final Conclusion: The order confirming the duty demand was sustained and the assessee's challenge failed on all substantive grounds.

Ratio Decidendi: Where the assessee is informed of the test result, sampling for dispute resolution must be authorised and in the presence of both sides, and a declaration found false in the context of provisional assessment can justify application of the extended limitation period.

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