Duty-free aviation turbine fuel rebate survives flight-number change; demand also fails on limitation where facts were known.

A later Board circular clarified that mere change in flight number or IGM number during an aircraft's journey between two Indian ports does not disqualify duty-free fuel supply to foreign-going aircraft, so rebate on aviation turbine fuel remained admissible and denial was unsustainable. The demand was also held time-barred because all material facts were already within the department's knowledge, leaving no basis to invoke the extended limitation period. The assessee therefore succeeded on both entitlement and limitation, and the demand could not be sustained.

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Issues: (i) Whether rebate of duty under the relevant exemption notifications was admissible on aviation turbine fuel supplied to foreign-going aircraft notwithstanding change in flight number or IGM number; and (ii) whether the demand was barred by limitation.

Issue (i): Whether rebate of duty under the relevant exemption notifications was admissible on aviation turbine fuel supplied to foreign-going aircraft notwithstanding change in flight number or IGM number.

Analysis: The denial of the benefit rested only on the earlier Board circular dated 19-11-2001 and on the circumstance that flight numbers had changed. That position stood modified by the later Board circular dated 25-6-2002, which clarified that mere change in flight number or IGM number during an aircraft's journey between two Indian ports would not make the aircraft ineligible for duty-free supply of fuel. The assessee's claim had also been accepted in subsequent proceedings.

Conclusion: The rebate benefit was admissible and the denial was unsustainable, in favour of the assessee.

Issue (ii): Whether the demand was barred by limitation.

Analysis: All relevant facts were already known to the department, and no basis existed for sustaining the demand for the larger period. On that footing, the plea of time bar was accepted.

Conclusion: The demand was time-barred, in favour of the assessee.

Final Conclusion: The assessee succeeded on both substantive entitlement and limitation, and the demand could not be sustained.

Ratio Decidendi: Where the governing circular is subsequently clarified to extend the exemption and all material facts were within the department's knowledge, denial of rebate and invocation of the extended period cannot be sustained.

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