Revenue neutrality and no suppression barred the duty demand, while extended limitation was unavailable on the disclosed facts.

Revenue neutrality defeated the duty demand because the appellants were entitled to credit of duty paid on inputs for both export clearances under bond and domestic clearances, so any demand would only create avoidable paper work without a real revenue gain. Extended limitation was also unavailable because the input-output ratio had already been disclosed to the department, was used to quantify the demand, and the lower authority had found no suppression or intention to evade duty. On those grounds, the demand was held unsustainable and the appeal was allowed.

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Issues: Whether duty demand was sustainable where the disputed inputs and finished goods resulted in revenue neutrality and whether extended limitation could be invoked in the absence of suppression or intention to evade duty.

Analysis: The appellants were entitled to credit of the duty paid on inputs both for exports under bond and for domestic clearances. The input-output ratio had already been disclosed to the department and had been used for quantifying the demand. In such circumstances, the duty demand would merely generate avoidable paper work without any real revenue gain. The finding of the lower authority that there was no suppression or intention to evade duty also supported denial of extended limitation.

Conclusion: The duty demand was not sustainable and the appeal was allowed.

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