Extended limitation not available where assessee followed prevailing Tribunal view and made full disclosure on valuation treatment.

Duty demand was held time-barred because the assessee had disclosed the valuation method and scrap-credit treatment to the department and had acted on the then-prevailing Tribunal view that scrap value was not includible in the assessable value of job-worked goods. The later Supreme Court ruling on includibility did not establish suppression, wilful misstatement, or intent to evade duty for the relevant period, so the extended limitation period was not available. As the demand was barred by limitation, the associated penalties were also set aside.

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Issues: Whether the duty demands and penalties could be sustained when the assessee had acted on the basis of an earlier Tribunal decision and the revenue invoked the extended period of limitation.

Analysis: The assessee had disclosed the method of valuation and the treatment of scrap credit in communications to the department. It had followed the view then prevailing from the Tribunal that scrap value was not includible in the assessable value of job-worked goods. The later Supreme Court ruling on includibility of scrap value did not defeat the assessee's contention on limitation, because the relevant period was covered by a bona fide legal position supported by the Tribunal's earlier decision. On these facts, suppression, wilful misstatement, or intent to evade duty was not established so as to justify invocation of the extended limitation period. Once the demand was time-barred, the associated penalty could not survive.

Conclusion: The demand was held to be barred by limitation and the penalties were set aside in favour of the assessee.

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