Extended limitation unavailable where clearances followed an earlier binding exemption view; confiscation and penalty also fall away.
Where goods were cleared on the basis of an exemption view earlier accepted in the assessee's own case and affirmed by the Supreme Court, subsequent reversal of that view did not establish suppression, fraud or mala fide. The extended period of limitation was therefore not available, and the demand survived only for the normal period. On the same bona fide premise, the ingredients for confiscation, redemption fine and penalty were absent, so those consequences were set aside. The matter was remanded only for re-quantification of the duty, if any, payable within limitation.
Issues: (i) Whether the extended period of limitation could be invoked for the demand; (ii) Whether confiscation, redemption fine and penalty were sustainable.
Issue (i): Whether the extended period of limitation could be invoked for the demand.
Analysis: The goods were cleared on the basis of an exemption claim that had earlier been accepted in the assessee's own case and had also been affirmed by the Supreme Court. In that situation, the assessee's conduct could not be treated as fraudulent, wilful, or actuated by suppression so as to justify invocation of the longer limitation period. The subsequent reference of the issue to a Larger Bench and reversal of the earlier view did not, by itself, establish mala fide.
Conclusion: The extended period of limitation was not invocable and the demand was confined to the normal period.
Issue (ii): Whether confiscation, redemption fine and penalty were sustainable.
Analysis: Since the assessee acted under a bona fide belief founded on an earlier binding decision in its favour, the ingredients necessary for confiscation and penalty were absent. The duty liability, to the extent legally recoverable within limitation, remained open only for re-quantification.
Conclusion: Confiscation, redemption fine and penalty were set aside, and the matter was remanded for re-quantification of the duty payable within limitation.
Final Conclusion: The appeal succeeded on limitation and on the penal consequences, but the duty demand surviving within the normal period was sent back for fresh quantification.
Ratio Decidendi: Where an assessee clears goods in accordance with an earlier binding decision in its own favour, the subsequent reversal of that view does not establish suppression or mala fide, and the extended period of limitation cannot be invoked.
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