Procedural delay cannot defeat exemption when export conditions are met; extended limitation also fails without wilful suppression.

Duty exemption under Notification No. 53/97-Cus. could not be denied merely because imported capital goods were installed after the stipulated period where they were received, installed and used for export-oriented manufacture and the export objective was achieved. The delay was treated as a procedural lapse capable of condonation, absent any allegation of diversion or failure to fulfil export obligation. The demand was also held time-barred because the record showed no wilful misstatement or suppression of facts with intent to evade duty, and the extended limitation period could not be invoked on a mere omission to seek extension. Consequently, the duty demand, interest and penalty were unsustainable.

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Issues: (i) whether duty exemption under Notification No. 53/97-Cus. could be denied merely because the imported capital goods were installed after the stipulated period, despite their use for manufacture of export goods and achievement of the export objective; (ii) whether the demand was barred by limitation for want of wilful misstatement or suppression of facts.

Issue (i): whether duty exemption under Notification No. 53/97-Cus. could be denied merely because the imported capital goods were installed after the stipulated period, despite their use for manufacture of export goods and achievement of the export objective.

Analysis: The substantive object of the notification was satisfied because the capital goods were received, installed and used for the intended export-oriented manufacture. The delay in installation was only procedural and was capable of being condoned by the jurisdictional authority. In the absence of any allegation that the goods were diverted or that the export obligation was not fulfilled, mere delayed installation did not justify denial of exemption.

Conclusion: The exemption could not be denied on this ground, and the assessee succeeded on this issue.

Issue (ii): whether the demand was barred by limitation for want of wilful misstatement or suppression of facts.

Analysis: The duty-free imports had been made much earlier than the notice, and the record disclosed no material showing any wilful misstatement or suppression with intent to evade duty. Since the delay in seeking extension was at most an omission and not a concealment of facts, the extended period could not be invoked.

Conclusion: The demand was time-barred and could not be sustained on limitation.

Final Conclusion: The duty demand, interest and penalty were unsustainable, and the assessee's appeal was allowed.

Ratio Decidendi: Where the substantive conditions of an exemption notification are fulfilled and the only lapse is a condonable procedural delay, exemption cannot be denied; limitation cannot be extended in the absence of wilful suppression or misstatement.

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