Revenue-neutral duty dispute bars extended limitation absent proven suppression and defeats related penalty.

Extended limitation for differential duty was held unsustainable in a revenue-neutral dispute where the assessee had paid duty during the disputed period and the Department did not establish positive suppression of facts. The Tribunal noted that the assessee consistently maintained that testing, repacking, palletization and shrink-wrapping were performed at the other appellant's premises, and the Department did not inspect or verify those assertions. On that factual basis, the dispute was treated as revenue-neutral, the extended period could not be invoked, the duty demand failed on limitation, and the connected penalty could not survive.

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Issues: Whether invocation of the extended period of limitation for demanding differential duty was sustainable in a revenue-neutral dispute where the assessee had paid duty during the disputed period and no positive suppression of facts was established.

Analysis: The dispute arose from the Department's view that the assessee ought to have adopted the assessable value declared by the other appellant for export clearances. The Tribunal found that the assessee had consistently maintained that further processes such as testing, repacking, palletization and shrink-wrapping were carried out at the other appellant's premises, and that the Department had not conducted inspection or verification to disprove this position. The assessee had paid duty during the relevant period, and any duty paid by the first appellant would have been available as credit to the second appellant. On these facts, the Tribunal held that the matter was revenue-neutral and that the Department had not established any positive act of suppression to justify the extended period.

Conclusion: Invocation of the extended period of limitation was not sustainable, and the duty demand failed on limitation. The penalty imposed on the connected appeal also could not survive.

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