Extended limitation in excise demand failed where divergent quilt classification supported bona fide belief and no suppression was proved.

Divergent trade practice in classifying quilts under Heading 5811 and Heading 9404 supported the assessee's bona fide belief that the goods fell under Heading 5811 and were covered by Notification No. 30/2004-CE. Because the later Board circular itself recorded that divergence and clarified the position prospectively, the ingredients for invoking the extended limitation period-fraud, collusion, wilful misstatement or suppression of facts-were not established. The central excise demand was therefore not sustainable on limitation grounds.

---

---

Issues: Whether the demand of central excise duty on quilts was liable to be sustained by invoking the extended period on the ground of intentional evasion, or whether the assessee was entitled to relief on the basis of bona fide belief arising from divergent trade practice in classification.

Analysis: The record showed a divergence in trade practice regarding classification of quilts, with some traders classifying them under Heading 5811 and others under Heading 9404. The Board's circular, issued later, itself recorded this divergence and clarified the classification prospectively. In that setting, the assessee's belief that the goods fell under Heading 5811 and were covered by Notification No. 30/2004-CE could not be treated as false or mala fide. On those facts, the ingredients necessary for invoking the extended period, namely fraud, collusion, wilful misstatement or suppression of facts, were not established.

Conclusion: The demand was not sustainable by invocation of the extended period, and the assessee succeeded on limitation.

---