Limitation bars duty demand when the show cause notice is time-barred and related interest and penalties fall with it.

A duty demand cannot be sustained where the appellate authority has already found the show cause notice time-barred and that finding remains unchallenged. The note states that, once limitation defeats the demand, the merits of the levy do not revive the liability; the assessee's bona fide reliance on the then prevailing Tribunal view supported the time-bar finding. On that basis, the associated interest and penalty consequences also could not survive.

---

---

Issues: Whether the duty demand could be sustained when the appellate authority had held it to be time-barred and, consequently, whether the confirmation of duty, interest, and penalties could stand.

Analysis: The appellate authority had recorded a clear finding that the show cause notice was issued beyond the normal period of limitation and that the assessee had acted bona fide on the basis of the then prevailing Tribunal view. Having so held, the authority could not have simultaneously upheld the duty demand on merits. In the absence of any appeal by the Revenue against the finding on limitation, the time-bar finding remained undisturbed. Once the demand itself was unsustainable on limitation, the associated penalty and related consequences could not survive.

Conclusion: The demand was held to be barred by limitation and the order confirming duty, interest, and penalties was set aside in favour of the assessee.

---