Classification dispute and extended limitation fail prima facie where scientific testing and notice particulars do not support demand.

In a classification dispute, waiver of pre-deposit was justified because the products had earlier been classified as claimed by the assessee, and two products had not been tested, leaving no strong prima facie basis to disturb the approved classification at the interim stage. Later test reports were not treated as decisive for the application, particularly where retesting had been sought but not allowed. The show cause notice also failed to set out a specific factual foundation for alleging suppression or wilful misstatement, so the extended period of limitation was not shown prima facie to apply. Trade terminology was held irrelevant where classification turned on scientific parameters; pre-deposit of duty and penalty was waived and recovery stayed.

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Issues: Whether waiver of pre-deposit of duty and penalty should be granted in a classification dispute, and whether the show cause notice disclosed a prima facie case for invoking the extended period of limitation.

Analysis: The products were earlier classified as claimed by the assessee and two of them had not been tested at all, leaving no apparent basis to disturb the approved classification at the interim stage. The later test reports were not acted upon for purposes of the application, especially when retest had been sought but not granted. The notice also did not specifically set out the factual foundation for alleging suppression or wilful misstatement. In a classification dispute turning on scientific parameters, trade terminology was held to be irrelevant, and the record disclosed a strong prima facie case on merits and limitation.

Outcome: Pre-deposit of duty and penalty was waived and recovery was stayed.

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