Extended limitation unavailable for royalty-related valuation dispute; penalties dropped, with only normal-period demand and interest surviving.

Extended limitation could not be invoked for duty demands linked to royalty, stowing charges and similar additions to assessable value because the dispute was treated as one of interpretation and had been under litigation for a long time, with no wilful suppression attributable to the assessee. The extended-period demand was therefore set aside, and the penalties were also not sustained. The normal-period demand, if any, together with applicable interest, was left undisturbed.

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Issues: Whether the extended period of limitation could be invoked on the ground of suppression of facts in respect of the duty demands arising from royalty, stowing charges and similar additions to assessable value, and whether the penalties imposed could be sustained.

Analysis: The show-cause notices in the appeals were issued beyond the normal limitation period. The dispute relating to inclusion of royalty and allied charges was treated as a matter of interpretation and had remained under litigation for a considerable time, indicating the absence of wilful suppression attributable to the assessee. On that footing, the basis for invoking the extended period was not made out. Since the demand for the normal period was not displaced, that portion was left to sustain along with applicable interest. In view of the same factual and interpretational setting, the penalties were not maintained.

Conclusion: The extended period demand was set aside in favour of the assessee, the penalties were also set aside, and only the demand for the normal period, if any, with applicable interest, was left undisturbed.

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