Prospective operation of duty-enhancing notifications limits retrospective levy, and limitation fails without proved suppression or mis-declaration.

An amendment enhancing compounded levy duty operates only prospectively unless the notification clearly provides retrospective effect, so it cannot increase liability for an earlier period. The extended limitation period also cannot be invoked without proved suppression of facts or mis-declaration, particularly where the assessee filed regular returns and paid differential duty after noticing the change. On those facts, the demand was time-barred and the associated penalty was unsustainable.

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Issues: (i) whether the amended notification enhancing the compounded levy rate operated retrospectively or only prospectively; (ii) whether the demand was barred by limitation and the extended period could be invoked on the allegation of suppression or mis-declaration.

Issue (i): whether the amended notification enhancing the compounded levy rate operated retrospectively or only prospectively.

Analysis: The amended notification altered the basis and quantum of duty liability under the compounded levy scheme. A notification increasing duty cannot be treated as clarificatory or given retrospective operation unless the statutory language clearly so provides. A change in the rate of duty, on settled legal principles, takes effect only from the date of its issuance and cannot fasten liability for an earlier period.

Conclusion: The amended notification had only prospective operation and could not be applied retrospectively against the assessee.

Issue (ii): whether the demand was barred by limitation and the extended period could be invoked on the allegation of suppression or mis-declaration.

Analysis: The assessee had filed regular returns and had also paid the differential duty on its own once the change in the notification was noticed. The department was already aware of the assessee's activities under the compounded levy scheme. In these circumstances, the essential ingredients for invoking the extended period, namely suppression of facts or mis-declaration, were not established.

Conclusion: The extended period of limitation was not available and the demand was time-barred.

Final Conclusion: The duty demand and penalty were unsustainable, and the appeal was allowed on merits as well as on limitation.

Ratio Decidendi: An amendment enhancing duty liability under a taxing notification operates only prospectively, and the extended period cannot be invoked in the absence of proved suppression or mis-declaration when the relevant facts were disclosed through regular compliance.

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