Classification dispute and extended limitation issue led to unconditional stay and waiver of pre-deposit in excise proceedings.

In a classification dispute, the tribunal found the extended limitation period prima facie unsustainable where the issue had first arisen through an internal audit objection and the assessee had consistently maintained its classification claim. A show cause notice issued nearly four years later under the proviso to Section 11A(1) of the Central Excise Act, 1944 was therefore not justified on the stated facts. The interpretation of the relevant tariff expression also supported the assessee's description of the goods as narrow woven fabric. Unconditional stay of recovery and waiver of pre-deposit of duty and penalty were granted.

---

---

Issues: Whether unconditional stay of recovery and waiver of pre-deposit of duty and penalty should be granted in a classification dispute where the demand was raised by invoking the extended period of limitation.

Analysis: The dispute regarding classification had surfaced in 1987 through an internal audit objection, and the assessee had consistently maintained its classification claim. The show cause notice was issued nearly four years later by invoking the proviso to Section 11A(1) of the Central Excise Act, 1944. On these facts, the extended period appeared prima facie unsustainable. The order also noted that the meaning of the tariff expression supported the assessee's description of the goods as narrow woven fabric.

Outcome: Unconditional stay of the duty demand and penalty was granted.

---