Differential duty under a corrected entitlement certificate cannot stand when clearances were made under valid authorisation and delay bars the demand.

Differential duty could not be demanded on DTA clearances made under a valid entitlement certificate merely because the Development Commissioner's certificate was later corrected for a typographical error; the later correction did not change the legal character of clearances already made, especially where the excess was adjusted against future entitlement. The demand was also time-barred because the clearances occurred in 2000, the certificate was corrected in 2002, and the show cause notice was issued only in 2008, making extended-period invocation unjustified on the recorded facts. The impugned demand and penalty were therefore set aside.

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Issues: (i) whether differential duty could be demanded on the basis of a subsequent correction of the Development Commissioner's DTA sale entitlement certificate; (ii) whether the demand was barred by limitation.

Issue (i): whether differential duty could be demanded on the basis of a subsequent correction of the Development Commissioner's DTA sale entitlement certificate.

Analysis: The unit had cleared the goods in DTA on the strength of the permission and entitlement certificate then in force. The later correction of the certificate, made after audit objection and to rectify a typographical mistake, did not alter the character of the clearances already made under a valid authorisation. The excess clearances were also stated to have been adjusted against future DTA entitlements, leaving no loss to the Revenue.

Conclusion: The demand on this ground was unsustainable and was against the assessee.

Issue (ii): whether the demand was barred by limitation.

Analysis: The clearances were made in 2000, while the show cause notice was issued only in 2008, after the certificate had already been corrected in 2002. On these facts, invocation of the extended period for a demand raised after such a long lapse was not justified.

Conclusion: The demand was barred by limitation and was against the Revenue.

Final Conclusion: The impugned demand and penalty were set aside and the appeal was allowed with consequential relief.

Ratio Decidendi: A duty demand cannot be sustained on clearances made under a valid entitlement certificate merely because the certificate was later corrected for a typographical error, and an extended-period demand raised after an inordinate delay is barred where the relevant facts were already on record.

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