Extended limitation and penalty fail where exemption dispute is interpretative and no suppression is shown.

For duty demands arising from clearances claimed under Notification No. 6/2002-C.E., the extended period of limitation was not available because the record indicated invoice disclosure, customer certificates, Cenvat reversals and prior exemption/refund proceedings, showing a bona fide interpretative dispute on whether wires and cables qualified as parts of aero planes and helicopters. In the absence of convincing evidence of deliberate misstatement, suppression or intent to mislead, the demand could not be sustained for the extended period. The consequential penalty also failed because it depended on the same extended-period demand and there was no basis for penal action.

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Issues: Whether the extended period of limitation could be invoked for duty demand arising from clearances made under Notification No. 6/2002-C.E. dated 01.03.2002, and whether penalty was sustainable.

Analysis: The demand arose in a dispute over whether wires and cables could be cleared as parts of aero planes and helicopters under the exemption notification. The record showed that the goods were cleared under invoices mentioning the notification, that the appellant had obtained customer certificates, that reversals were reflected in the Cenvat records, and that the issue had earlier been the subject of exemption and refund proceedings. The dispute was essentially one of interpretation and classification, and there was material to indicate a bona fide view on admissibility of the exemption. In the absence of convincing evidence of deliberate misstatement, suppression, or a design to mislead the department, invocation of the extended period was not justified. Since the demand for the extended period failed, the consequential penalty also could not survive.

Conclusion: The extended period of limitation was not invocable, and the penalty was not sustainable; the appellant succeeded on these issues.

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