Revenue-neutral duty disputes cannot justify extended limitation absent wilful suppression or intent to evade duty.

The extended period of limitation could not be invoked for duty demand on undervaluation of intermediate goods cleared to sister units because the assessee had followed the valuation method then prevailing and filed cost certificates based on the instructions available at the time. The disputed period also preceded the Board circular relied on by the department. As the goods moved within the same assessee's manufacturing chain, any duty paid at the source unit would have been available as credit in the receiving unit, creating revenue neutrality. In the absence of evidence of wilful suppression or intent to evade duty, the ingredients for extended limitation and penal consequences were not established, and the demand failed.

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Issues: Whether the extended period of limitation could be invoked for demanding duty on undervaluation of intermediate products cleared to sister units, and whether revenue neutrality negatived any allegation of wilful suppression or intent to evade duty.

Analysis: The appellants had adopted the valuation method prevailing at the relevant time and filed cost certificates on the basis of the instructions then available. The disputed period pre-dated the Board circular relied upon by the department for adding further elements to cost. The intermediate goods were cleared to other units of the same assessee for use in manufacture of final products, so any duty paid at the manufacturing unit would have been available as credit in the receiving unit. In such a revenue-neutral situation, and in the absence of evidence showing deliberate withholding of material information or intent to evade duty, the ingredients required to sustain invocation of the extended limitation and penal consequences were not established.

Conclusion: The extended period was not invocable, the demand could not be sustained, and the appeal succeeded in favour of the assessee.

Ratio Decidendi: Where the duty position is revenue neutral and there is no evidence of wilful suppression or intent to evade duty, the extended period under Section 11A cannot be invoked.

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