Extended limitation for excise demand fails where repacking and relabelling were disclosed and bona fide belief negated suppression.

Repacking and relabelling of imported inputs was treated by the assessee as manufacture, but the activity was held to be only repacking and relabelling under the relevant chapter note and settled precedent. Because the legal position was debatable, the assessee had disclosed the activity, and the department had earlier taken a similar view, bona fide belief was accepted and suppression or mala fide intent to evade duty could not be inferred. The notice was issued beyond the normal limitation period, so the extended period of limitation was not available and the demand was time-barred.

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Issues: Whether the demand was barred by limitation where the assessee treated repacking and relabelling of imported inputs as manufacture and paid duty accordingly.

Analysis: The disputed activity involved only repacking and relabelling of imported goods. The relevant chapter note was interpreted in light of settled precedent, and the department itself had earlier taken a similar view on such activity. In that background, the assessee's belief that the process amounted to manufacture was treated as bona fide. Where the legal position was debatable and the assessee had disclosed the activity, suppression of facts or mala fide intent to evade duty could not be inferred. The demand for the normal period was not the basis of the impugned confirmation, and the notice was issued beyond the normal limitation period.

Conclusion: The extended period of limitation was not available and the demand was time-barred.

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