Corrigendum cannot create a fresh duty basis; limitation, extended period and penalties failed absent proof of suppression.

A corrigendum to a show cause notice cannot go beyond arithmetical correction and introduce a fresh basis of demand; here it was held time-barred because it added a new levy foundation. A general B-17 bond did not waive the statutory limitation under Section 11A of the Central Excise Act, 1944. The extended period was not invokable because the Revenue failed to prove prior knowledge, suppression, or intent to evade duty. The record showed the merits were contested before the adjudicating authority, and penalties were therefore not imposable. Demand and penalty did not survive in full, with only limited quantification remanded for documentary verification.

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Issues: (i) whether the corrigendum altered the basis of the show cause notice and was time-barred; (ii) whether a general B-17 bond excluded the applicability of limitation under Section 11A of the Central Excise Act, 1944; (iii) whether the extended period could be invoked; (iv) whether the appellants had contested the merits before the adjudicating authority; and (v) whether penalties were imposable.

Issue (i): whether the corrigendum altered the basis of the show cause notice and was time-barred.

Analysis: The corrigendum not only corrected the duty computation in the light of the amended exemption notification but also introduced a new basis by stating that all other duties were leviable at full tariff rate on DTA clearances. That addition went beyond a mere arithmetical correction and changed the foundation of the original notice. The corrigendum was issued beyond the permissible period and could not survive on the new ground introduced by it.

Conclusion: The corrigendum was held to have altered the basis of the original notice and was time-barred.

Issue (ii): whether a general B-17 bond excluded the applicability of limitation under Section 11A of the Central Excise Act, 1944.

Analysis: The bond was examined in the context of duty-free procurement and export obligations. It was found that the bond did not operate as a blanket waiver of the statutory limitation for demanding duty on DTA clearances, especially where exemption was claimed independently under Notification No. 23/2003-CE. The reasoning in the cited precedents did not justify treating the bond as eliminating the limitation prescribed by Section 11A.

Conclusion: Section 11A of the Central Excise Act, 1944 was held applicable, and the B-17 bond did not exclude limitation.

Issue (iii): whether the extended period could be invoked.

Analysis: The material on record did not show that the appellants had knowledge that the raw material supplier was availing deemed export benefits under paragraph 8.3(a) and (b) of the Foreign Trade Policy. The supplier's invoices did not clearly disclose such availment, and the Revenue failed to establish prior knowledge, suppression, or deliberate withholding of facts by the appellants. In the absence of evidence of intent to evade duty, the extended period could not be sustained.

Conclusion: The extended period was held to be not invokable.

Issue (iv): whether the appellants had contested the merits before the adjudicating authority.

Analysis: The reply to the show cause notice and the adjudication record showed that the appellants had disputed the allegation that they knew of the supplier's deemed export benefit and had also denied liability to duty at the higher rate. The record therefore did not support the claim that the merits had not been contested, although a particular contention regarding DFIA licences under other FTP paragraphs had not been raised below.

Conclusion: The merits were held to have been contested before the adjudicating authority.

Issue (v): whether penalties were imposable.

Analysis: Since the Revenue failed to establish knowledge, suppression, or intention to evade duty, the foundation for penal action was absent. The finding that the extended period was unavailable also undermined the basis for penalty.

Conclusion: The penalties were held to be not imposable.

Final Conclusion: The order of demand and penalty did not survive in full. The matter was sent back only for limited quantification after documentary verification, while the rest of the appeal succeeded in favour of the appellants.

Ratio Decidendi: A corrigendum cannot introduce a fresh basis of demand beyond a mere correction, and a demand under exemption-based DTA clearance is subject to Section 11A of the Central Excise Act, 1944 unless suppression or intent to evade duty is proved with evidence.

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