EOU de-bonding demand fails for limitation, no suppression, and absence of Development Commissioner consent.

Customs demand raised after de-bonding of an EOU was unsustainable where the unit had already satisfied the NFE requirement and the notice was issued more than three years later. In the absence of any allegation of suppression, misstatement, or contumacious conduct, the extended limitation could not be invoked, and the demand was treated as a mere change of opinion. The demand also could not stand without the requisite recommendation or consent of the Development Commissioner, as reflected in the applicable circular. The notice and consequential demand were therefore not maintainable.

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Issues: Whether the customs demand raised after de-bonding of the EOU was sustainable when the unit had already been found to have satisfied the NFE requirement and whether the show cause notice was vitiated by limitation and absence of suppression or misstatement.

Analysis: The notice was issued more than three years after de-bonding. No allegation of contumacious conduct, suppression, or misstatement was made. The demand was also treated as arising from a mere change of opinion. Further, the demand could not be sustained without the requisite recommendation or consent of the Development Commissioner, as emphasized in the circular relied upon. In these circumstances, the notice and the consequential demand were found to be unsustainable.

Conclusion: The customs demand was held not maintainable and the assessee succeeded.

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