Bona fide classification belief barred extended limitation for tie bars after tariff reclassification and exemption coverage.

Bona fide classification belief prevented use of the extended limitation period where tie bars had been treated under a tariff advice and later placed in a tariff item covered by exemption. The Tribunal noted that Trade Notice No. 210/81 classified tie bars under Tariff Item 26AA(ia), and that the tariff was later restructured with tie bars falling under Tariff Item 25, which was exempted by Notification No. 208/83. On that footing, the assessee's belief that no licence or duty was payable during the relevant period was held bona fide, so the demand was barred by limitation and the appeal succeeded.

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Issues: Whether the duty demand was barred by limitation in view of the assessee's bona fide belief regarding classification and exemption of tie bars.

Analysis: The Tribunal noted that a tariff advice circulated through Trade Notice No. 210/81 classified tie bars under Tariff Item 26AA(ia), and that the tariff was later restructured with tie bars placed under Tariff Item 25. It also noted that goods falling under that item, including tie bars, were exempted under Notification No. 208/83. On this basis, the assessee's belief that no licence or duty was payable during the relevant period was held to be bona fide. Following the cited precedents, the Tribunal accepted that the extended period could not be invoked.

Conclusion: The demand was held to be time barred and the appeal was allowed.

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