Limitation and natural justice support interim relief where classification is challenged after delay and the full test report is withheld.
A departmental challenge to an earlier accepted classification raised a strong prima facie limitation issue because samples were drawn much later and the extended period was invoked only after the chemical report was communicated. The assessees also established a natural justice objection because they were not supplied the complete test report, leaving them unable to effectively answer the department's case on classification and duty liability. On these grounds, interim relief was granted and recovery of the confirmed duty and penalties was stayed pending appeal.
Issues: (i) Whether the assessees had made out a prima facie case on limitation for grant of waiver of pre-deposit and stay; (ii) Whether denial of the full test report amounted to breach of natural justice.
Issue (i): Whether the assessees had made out a prima facie case on limitation for grant of waiver of pre-deposit and stay.
Analysis: The classification claimed by the assessees had earlier been approved under the then applicable classification procedure. The samples were drawn much later, after the approval, and the show cause notice was issued only after the chemical report was communicated. In these circumstances, and having regard to the departmental obligation to satisfy itself before approving the declaration, the demand raised by invoking the extended period did not stand on a strong footing at the interim stage.
Conclusion: The limitation plea was held to be a strong prima facie case in favour of the assessees.
Issue (ii): Whether denial of the full test report amounted to breach of natural justice.
Analysis: The assessees were not supplied the complete text of the test report. Without the full report, they were deprived of an effective opportunity to meet the departmental case and explain their position on classification and duty liability.
Conclusion: The denial of the complete test report was treated as a violation of natural justice in favour of the assessees.
Final Conclusion: Interim relief was granted to the assessees by suspending recovery of the confirmed duty and penalties pending the appeal.
Ratio Decidendi: Where a classification accepted by the department is challenged after a substantial delay and the assessee is not furnished the complete material relied upon, the assessee establishes a prima facie case for interim relief on limitation and natural justice grounds.
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