Classification under Chapter 8707 and exemption failed, but disclosed returns barred extended limitation and penalty.

Body-building activity on duty-paid chassis was not accepted as qualifying under Chapter Heading 8707 for the claimed exemption, as the precedents cited were distinguishable on facts and did not displace the department's classification view. Regular filing of ER-1 returns disclosing the adopted classification negatived suppression or wilful misstatement, so the extended period of limitation could not be invoked and penalty could not be sustained. The demand therefore survives only for the normal limitation period, while the extended-period demand is set aside and penalty is deleted.

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Issues: (i) Whether the body-building activity on duty-paid chassis was classifiable under Chapter Heading 8707 and entitled the assessee to the exemption notification claimed; (ii) whether the extended period of limitation was invocable and penalty could be imposed.

Issue (i): Whether the body-building activity on duty-paid chassis was classifiable under Chapter Heading 8707 and entitled the assessee to the exemption notification claimed.

Analysis: The assessee had classified its final products under Chapter Heading 8707, whereas the record showed that the cited decisions were rendered on different facts where classification under Chapter Heading 8704 and exemption under the relevant notifications were in issue. The present case involved admitted classification under Chapter Heading 8707 instead of 8704, and the authorities' view that the product did not fall within the claimed classification was not displaced by the precedents relied upon.

Conclusion: The assessee did not succeed on the classification and exemption issue.

Issue (ii): Whether the extended period of limitation was invocable and penalty could be imposed.

Analysis: The assessee had been filing ER-1 returns regularly and had disclosed the classification adopted in those returns. On that basis, suppression or wilful misstatement sufficient to justify the extended period was not established. Once the extended period failed, penalty also could not be sustained on the disputed demand covered by that period.

Conclusion: The extended period of limitation was not invocable and penalty was not imposable.

Final Conclusion: The demand survives only to the extent of the normal limitation period, while the demand for the extended period is set aside and penalty is deleted.

Ratio Decidendi: Regular filing of returns disclosing the adopted classification negatives invocation of the extended period of limitation absent suppression or wilful misstatement, even where the assessee's classification is found incorrect.

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