Extended limitation and revenue neutrality principles applied to sustain only the normal-period duty demand and delete penalty.

Extended limitation was not sustainable because the record did not establish suppression of facts with intent to evade duty; the assessee had disclosed its duty payment and credit-taking practice and had sought departmental clarification, so only the normal-period demand survived. The plea of revenue neutrality also failed on the facts, as it did not justify deletion of the entire demand where duty continued to be paid for a substantial period. The demand beyond limitation and the penalty were deleted, while the normal-period demand and corresponding interest were maintained.

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Issues: (i) whether the demand beyond the normal period was barred because suppression of facts with intent to evade duty was not established; (ii) whether the plea of revenue neutrality justified setting aside the demand in full.

Issue (i): Whether the demand beyond the normal period was barred because suppression of facts with intent to evade duty was not established.

Analysis: The assessee had disclosed in its correspondence that it was paying duty on the product and availing credit on inputs and input services, and it had sought clarification from the department on the dutiability of the product. The department did not respond to the requests for clarification. The assessee continued the practice until December 2012 and the record did not establish a deliberate withholding of information to evade duty. On these facts, invocation of the extended period was not justified, though the normal period demand remained sustainable.

Conclusion: The extended period of limitation was held to be unsustainable, while the demand confined to the normal period was sustained.

Issue (ii): Whether the plea of revenue neutrality justified setting aside the demand in full.

Analysis: The plea was rejected because the assessee continued to pay duty for a substantial period even after realizing its position, and the facts were distinguishable from the precedent relied upon. Revenue neutrality, on these facts, did not warrant complete deletion of the demand.

Conclusion: The demand was not set aside in full on the ground of revenue neutrality.

Final Conclusion: The assessee succeeded only to the extent of deletion of the demand for the period beyond limitation and of the penalty, while the demand for the normal period and the corresponding interest were maintained.

Ratio Decidendi: Extended limitation cannot be invoked absent proved suppression of facts with intent to evade duty, and a revenue-neutral plea will not override a sustainable normal-period demand on the facts of the case.

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