Limitation in classification disputes turns on disclosure and department knowledge; extended period was unavailable, making the demand time barred.

A classification dispute was treated as debatable where the assessee had disclosed its classification claim in correspondence seeking exemption and the department had earlier accepted the product classification in the registration record. On those facts, the department was held to have knowledge of the relevant material, so the extended period could not be invoked without suppression, misdeclaration, or mala fide intent. As the show cause notice was issued beyond the normal period, the demand for the disputed period was time barred, and the matter was disposed of on limitation without examining classification on merits.

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Issues: Whether the demand for the period 01.02.2002 to 28.02.2005 was barred by limitation on the ground that the classification dispute was disclosed to the department and there was no suppression, misdeclaration, or mala fide intention.

Analysis: The classification dispute was held to be debatable, with the department itself having earlier accepted the product as classifiable under Chapter heading 2504.90 in the registration record and the appellant having disclosed its classification claim in correspondence seeking exemption. On these facts, the department was found to have knowledge of the relevant facts, and the extended period could not be invoked in the absence of suppression or mala fide intent. Since the show cause notice was issued long after the normal period, the demand was held to be time barred. The appeal was therefore disposed of on limitation without examining the merits of classification.

Conclusion: The demand for the disputed period was barred by limitation and the extended period of limitation was not available to the department.

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