Extended limitation for duty demand requires proof of suppression, wilful misstatement or fraud with intent to evade duty

The extended limitation period for recovery of duty cannot be invoked unless the department establishes wilful misstatement, suppression of facts or fraud with intent to evade duty. Where product classification was finalised after the test report and the assessee paid duty on that basis, a later demand for an earlier period could not be sustained in the absence of such material. The finding of suppression, wilful misstatement and fraud was therefore unsustainable, and the demand was barred by limitation.

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Issues: Whether the duty demand was barred by limitation in the absence of wilful misstatement, suppression of facts or fraud by the assessee.

Analysis: The classification of the product was finalized by the department after receipt of the test report, and the assessee had thereafter paid duty on that basis. The demand was raised several years later for an earlier period. On these facts, there was no material to support a finding of wilful misstatement, suppression of facts or fraud, and the invocation of an extended period to sustain the demand was not justified.

Conclusion: The demand was barred by limitation and the finding of suppression, wilful misstatement and fraud was unsustainable.

Ratio Decidendi: The extended limitation for recovery of duty cannot be invoked unless the department establishes wilful misstatement, suppression of facts or fraud with intent to evade duty.

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