Limitation and extended-period invocation fail where the agreement predated an ad valorem excise regime and no duty-evasion intent was shown.

A duty demand was held time-barred because the underlying agreement was entered into when excise duty applied at a specific rate, not on an ad valorem basis. The later shift to an ad valorem regime occurred only in March 1994, so the arrangement could not reasonably be treated as having been structured to evade duty when the value of the goods had no bearing on the duty rate at inception. On that basis, the extended period of limitation was found inapplicable and the entire demand was barred by limitation.

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Issues: Whether the duty demand was barred by limitation and whether the extended period could be invoked.

Analysis: The agreement between the parties was entered into in 1992 when excise duty on the product was at a specific rate, and not on an ad valorem basis. The change to an ad valorem regime came only in March 1994. In these circumstances, the agreement could not reasonably be treated as having been structured with an intention to evade duty, because the value of the goods had no bearing on the duty rate when the arrangement was made. On that basis, the demand was held to be time-barred and the extended period was found inapplicable.

Conclusion: The entire demand was barred by limitation and the extended period of limitation could not be invoked.

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