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Issues Involved:
1. Classification of imported paper. 2. Violation of principles of natural justice. 3. Limitation for demand of short-levied duty under Section 39 of the Sea Customs Act. Issue-wise Detailed Analysis: 1. Classification of Imported Paper: The petitioner company imported 143 and 163 bales of paper, declared as white antique laid printing paper and white glazed news printing paper, respectively. They contended that the imported paper contained not less than 70% mechanical wood pulp and weighed more than 40 grams per square meter, thus falling under item 44 of the Import Trade Control Policy Book and item 3 of the footnote to entry 44 of the Indian Customs Tariff. Initially, the Customs Authorities allowed the clearance of half the consignment and, upon testing, found the goods in accordance with the bills of entry, releasing them on payment of duty under item 3 of the footnote to entry 44. However, a subsequent notice of demand was issued for additional duty, asserting that the paper was hard-sized and suitable for writing, thus assessable under item 44 as "paper other sort" at 39 3/8% ad valorem. The Assistant Collector of Customs concluded that the paper was hard-sized creamlaid paper used for writing, based on retests and market enquiries. 2. Violation of Principles of Natural Justice: The petitioner argued that the Assistant Collector of Customs wrongfully considered undisclosed 'market enquiries' in violation of natural justice. The respondents conceded that the adjudication order was flawed due to the reliance on undisclosed market enquiries. Consequently, the adjudication order was set aside for violating the principles of natural justice. 3. Limitation for Demand of Short-Levied Duty under Section 39 of the Sea Customs Act: The petitioner contended that the demand for short-levy was barred by limitation under Section 39 of the Sea Customs Act, which stipulates that notice of demand must be given within three months from the date of first assessment. The notices of demand were issued on January 19, 1953, within the stipulated period. However, the petitioner argued that the occasion for issuing such notice arises only when the Customs Collector possesses materials showing short-levy, not merely on apprehension. The court agreed, noting that the notice was issued in anticipation rather than upon factual determination of short-levy. As such, the notices dated January 19, 1953, were deemed premature and invalid. Consequently, subsequent show cause notices were also beyond the period of limitation. Conclusion: The court held that the adjudication order was invalid due to the violation of natural justice and the premature issuance of the notice under Section 39. The Rule succeeded, a Writ of Certiorari was issued quashing the adjudication order, and a mandate was issued restraining the respondents from giving effect to the order. The petitioner company was permitted to seek a refund of the sums already paid.
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