Extended limitation barred where exemption claim and relevant facts were already known to the department; penalties and interest failed.

Extended limitation could not be invoked where the exemption claim was made on the basis of a certificate received through the principal contractor, and the department already had the relevant facts before it. The assessee had informed the jurisdictional officer of its intention to clear the goods under exemption, and the disputed eligibility facts were available to the department, which could have proceeded by provisional assessment or acted within the normal period. On that record, deliberate suppression or misstatement was not established. The consequence was that interest and penalties were unsustainable, and liability was confined to duty on clearances falling within the normal limitation period.

---

---

Issues: Whether the extended period of limitation, interest and penalty could be invoked against the assessee on the ground of suppression or misstatement when the exemption claim was made on the basis of a certificate supplied through the principal contractor and the department had the relevant facts before it.

Analysis: The assessee did not independently verify whether the funding agency answered the description of an international organisation under the exemption notification, but the claim to exemption originated from the certificate issued in relation to the project and conveyed through the principal contractor. The assessee had also informed the jurisdictional officer of its intention to clear the goods under the exemption. The facts on which the department later disputed eligibility were thus available to the department. In such circumstances, the department could have resorted to provisional assessment or taken action within the normal period of limitation. The record did not justify attributing deliberate suppression or misstatement to the assessee.

Conclusion: The extended period of limitation was not available, and the demand for interest and penalties was not sustainable. The assessee remained liable only for duty for clearances falling within the normal period of limitation.

---