Limitation and extended period: disclosed classification and departmental knowledge led to prima facie time-bar treatment and stay.

Classification declarations disclosed the nature of the product, and the record did not show suppression with intent to evade duty. In view of later Tribunal decisions, mere departmental knowledge was insufficient to justify invocation of the extended period, and the existence of conflicting decisions on manufacture also supported the absence of wilful suppression. The demand was therefore treated as prima facie time-barred, leading to waiver of pre-deposit of duty and penalty and stay of recovery pending appeal.

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Issues: Whether the demand was prima facie barred by limitation so as to justify waiver of pre-deposit and stay of recovery.

Analysis: The applicants had filed classification declarations during the relevant period and had disclosed the nature of the product. The question of limitation had not been decided by the adjudicating authority. The reasoning that the extended period could be invoked merely because the department had knowledge was not accepted, in view of later Tribunal decisions explaining that conscious knowledge of the department negatives invocation of the extended period. The existence of conflicting decisions on the manufacture issue also supported the view that suppression with intent to evade duty was not apparent on the record. On that basis, the demand was treated as prima facie time-barred.

Conclusion: The demand was held to be prima facie barred by limitation, and pre-deposit of duty and penalty was waived with stay of recovery pending appeal.

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