Revenue-neutral duty demand cannot justify extended limitation absent intent to evade duty.

Differential duty demand could not be sustained where the duty paid on intermediate clearances was available as credit to the recipient units, making the situation revenue neutral. In the absence of any material showing intent to evade duty, the majority held that the extended period of limitation was not justified. As the demand was founded on the extended period, it failed in full and the impugned order could not stand. The order was set aside and relief followed.

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Issues: Whether, in the facts of the case, the demand of differential duty could be sustained by invoking the extended period of limitation when the duty paid on the intermediate clearances was available as credit to the recipient units and the situation was revenue neutral.

Analysis: The majority held that the duty paid on the bulk clearances was available to the recipient units as credit, and the duty paid by those units out of PLA was higher than the duty involved in the impugned demand. In such circumstances, there was no intention to evade duty, and the invocation of the extended period was not justified. Once the demand based on the extended period failed, the impugned order could not be sustained in the form in which it had been confirmed.

Conclusion: The demand was not sustainable on the ground of revenue neutrality and the extended period of limitation could not be invoked.

Final Conclusion: The impugned order was set aside and the appeals were allowed with consequential relief.

Ratio Decidendi: Where the duty on clearances is available as credit to the recipient and the facts do not show intent to evade duty, the extended period of limitation cannot be invoked on a revenue-neutral demand.

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