Exemption denial and normal limitation apply where duty dispute turns on interpretation, not suppression, with penalty set aside.

Entitlement to Notification No. 74/93-CE was denied because the Larger Bench had already held that the exemption is unavailable where goods are manufactured for an Electricity Board that is not a department of the State Government. On limitation, the dispute was treated as one of legal interpretation rather than suppression, since the assessee had been paying duty under protest and acted after an earlier favourable Tribunal order; the extended period was therefore not available. For the same reason, penalty was unwarranted and set aside, leaving the demand confined to the normal period.

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Issues: (i) Whether the appellant was entitled to the benefit of Notification No. 74/93-CE dated 28.02.1993; (ii) whether the demand for duty was barred by limitation and whether penalty was sustainable.

Issue (i): Whether the appellant was entitled to the benefit of Notification No. 74/93-CE dated 28.02.1993.

Analysis: The entitlement to the exemption had already been settled by the Larger Bench decision, which held that the benefit of the notification is not available where the goods are manufactured for an Electricity Board that is not a department of the State Government. The legal position was treated as no longer open for reconsideration.

Conclusion: The appellant was not entitled to the benefit of Notification No. 74/93-CE dated 28.02.1993.

Issue (ii): Whether the demand for duty was barred by limitation and whether penalty was sustainable.

Analysis: The appellant had earlier been paying duty under protest and stopped payment only after the Tribunal's earlier order in its favour. The records did not show any protective demand or any contemporaneous direction by the department after stoppage of duty. In the circumstances, the dispute turned on interpretation of law and not on suppression of facts, so invocation of the extended period was not justified. On the same footing, penalty was held to be unwarranted.

Conclusion: The demand could not be sustained by invoking the extended period of limitation and the penalty was liable to be set aside.

Final Conclusion: The exemption claim failed, but the demand was confined to the normal period of limitation and the penalty was set aside.

Ratio Decidendi: Where the dispute is purely one of interpretation of law and the assessee has acted openly on the basis of an earlier favourable tribunal order, extended limitation cannot be invoked and penalty is not justified.

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