Suppression of intended re-export defeats customs exemption and justifies extended limitation for duty demand.

Where imported goods were cleared duty-free on the footing that they were for domestic use, intentional non-disclosure that they were in fact meant for re-export constituted suppression of material facts and defeated the exemption under Notification No. 208/1981. On that basis, the extended limitation period under the proviso to Section 28(1) of the Customs Act, 1962 was available to the Revenue, and the show cause notice demanding customs duty was within time. The demand was therefore sustained and the order in favour of the importer was reversed.

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Issues: Whether the show cause notice demanding customs duty was within time under the proviso to Section 28(1) of the Customs Act, 1962, and whether the importer could claim exemption under Notification No. 208/1981 when the goods were imported with the intention of re-export.

Analysis: The imported life-saving equipment was treated, by necessary implication from the scheme of import control and the exemption notification, as meant for use in India. On the facts, the goods were cleared without duty on the footing that they were for domestic use, but were in fact intended for export shortly thereafter. That non-disclosure amounted to suppression of the true position and deprived the importer of the benefit of the exemption. In those circumstances, the extended period under the proviso to Section 28(1) was available to the Revenue.

Conclusion: The show cause notice was held to be valid and within the extended period, and the demand of duty could be sustained against the assessee.

Final Conclusion: The Revenue's demand for customs duty was restored, and the order setting aside the Collector's decision was reversed.

Ratio Decidendi: Where goods are exempted on the basis of import for domestic use, an intentional non-disclosure that they were brought in for re-export amounts to suppression of material facts and enables invocation of the extended limitation period under the Customs Act.

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