Extended limitation and deemed manufacture: open records defeated suppression, while packing and relabelling supported SSI exemption and input credit.

Extended limitation could not be invoked where clearances and business transactions were openly recorded and the record disclosed no deliberate suppression or intent to evade duty. Packing imported goods, relabelling them and affixing MRP was treated as manufacture under the deeming provision read with the Third Schedule; on that basis, the assessee's use of a permitted and registered brand name supported eligibility for SSI exemption. Once manufacture was accepted for duty purposes, credit on inputs and input services was also available. The impugned order was set aside and consequential relief followed.

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Issues: (i) Whether the duty demands were barred by limitation for want of suppression of facts or intent to evade duty; (ii) whether the activity of packing, relabelling and affixing MRP on imported goods amounted to manufacture and, if so, whether the assessee was entitled to SSI exemption and credit of duty on inputs and input services.

Issue (i): Whether the duty demands were barred by limitation for want of suppression of facts or intent to evade duty.

Analysis: The clearances and business transactions were recorded transparently, the products were openly marketed through television, and the dispute turned on the legal characterization of the activity under the tariff and the deeming provision for manufacture. On those facts, the record did not disclose any deliberate suppression or contumacious conduct to justify invocation of the extended period.

Conclusion: The demands were time barred and could not be sustained under the extended period.

Issue (ii): Whether the activity of packing, relabelling and affixing MRP on imported goods amounted to manufacture and, if so, whether the assessee was entitled to SSI exemption and credit of duty on inputs and input services.

Analysis: The activity of packing goods in corrugated boxes and affixing labels and MRP was treated as manufacture under the deeming provision read with the Third Schedule. The brand name was permitted to be used in India and stood registered in the assessee's name, bringing the case within the line of authorities recognising eligibility to SSI exemption. Once manufacture was assumed for duty purposes, credit on inputs and input services was also available.

Conclusion: The assessee was entitled to SSI exemption and consequential credit benefits on the merits.

Final Conclusion: The impugned order was set aside in full, and the appeals succeeded with consequential relief.

Ratio Decidendi: Where the dispute is confined to a legal interpretation of manufacture and the assessee's clearances and transactions are openly recorded, extended limitation cannot be invoked absent evidence of suppression or intent to evade duty; once manufacture is accepted, SSI exemption and input credit cannot be denied on the same factual matrix where the brand use is permitted and registered in the assessee's name.

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