Limitation in customs duty demands turns on proved misdeclaration; unsupported allegations cannot justify the extended period or penalty.

Customs duty demand and penalty cannot be sustained where the notices were issued beyond the normal limitation period and the extended period rested only on an unproven allegation of misdeclaration. The record did not establish any factual basis for treating the cobalt powder as misdeclared, while chemical test reports and the prior grant of exemption by assessing officers supported the view that the goods were unwrought. In that setting, the earlier customs treatment could not be disregarded to justify extended limitation, and the adjudicating authority's failure to address the limitation objection further weakened the demand. The demand was therefore barred by limitation and the penalty was unsustainable.

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Issues: Whether the demand of duty and imposition of penalty were barred by limitation, and whether the extended period could be invoked on the allegation of misdeclaration of the imported cobalt powder.

Analysis: The notices were issued beyond the normal period of six months. The basis for invoking the extended period was that the importer had misdeclared the goods as unalloyed or unwrought cobalt. However, the notices and the adjudication order did not establish any factual foundation for such allegation. The goods had already been granted the exemption by the assessing officers, and chemical test reports had consistently indicated that the material could be considered unwrought. In that background, the earlier view taken by the customs authorities could not be ignored to sustain invocation of the extended period. The adjudicating authority also failed to deal with the limitation objection raised by the importer.

Conclusion: The demand was barred by limitation and the penalty could not be sustained.

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