Disclosure of classification and exemption details defeats suppression allegations and shifts recovery from Rule 9(2) to Rule 10.

Disclosure of the relevant classification list and exemption notification to the department negatived any allegation of wilful misrepresentation or suppression of facts. On those facts, recovery could not be sustained under Rule 9(2), which applies to clandestine or suppressed clearances, and the demand was properly referable to Rule 10 because the matter was already within departmental knowledge. The review notice was therefore not sustained and the proceedings were dropped in favour of the assessee.

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Issues: Whether the demand for duty was recoverable under Rule 9(2) or was governed by Rule 10, and whether the assessee's conduct amounted to wilful misrepresentation or suppression of facts so as to justify review proceedings.

Analysis: The assessees had filed a classification list and had disclosed the relevant exemption notification to the departmental authorities, which supported their bona fides. In these circumstances, the clearances could not be treated as concealed or suppressed so as to attract the extended recovery mechanism under Rule 9(2). The facts showed that the matter was within the knowledge of the department, and the recovery was therefore properly referable to Rule 10.

Conclusion: Rule 9(2) was held inapplicable, Rule 10 was held applicable, and the allegation of wilful misrepresentation or suppression of facts failed.

Final Conclusion: The review notice was not sustained and the proceedings were dropped in favour of the assessee.

Ratio Decidendi: Where the assessee has disclosed the relevant classification and exemption position to the department, the case does not involve suppression of facts or wilful misrepresentation, and recovery cannot be sustained under the provision applicable to clandestine or suppressed clearances.

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