Extended limitation unavailable where exemption dispute involved bona fide interpretation and facts were already within departmental knowledge.

A dispute over exemption notification interpretation turned on the meaning of "wholly" in relation to use of imported raw material. The Tribunal found the issue involved a plausible legal interpretation and that the relevant facts were already available from the record, including audit proceedings and an earlier show cause notice on the same subject. On that basis, it held that there was no deliberate suppression or intent to evade duty, so the extended limitation period could not be invoked. The demand was therefore treated as time barred, with consequential relief granted.

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Issues: Whether the demand was barred by limitation and whether the extended period could be invoked in the facts of the case.

Analysis: The dispute turned on the interpretation of the exemption notification, particularly the effect of the expression "wholly" in relation to use of imported raw material. The Tribunal noted that the issue involved a plausible legal interpretation and that the material facts were already available from the records, including audit proceedings and an earlier show cause notice on the same subject. On that basis, the Tribunal held that the matter did not disclose a case of deliberate suppression or intent to evade duty, and therefore the extended limitation period was not justified.

Conclusion: The demand was held to be time barred, and the appeal was allowed with consequential relief.

Ratio Decidendi: Where the dispute concerns a bona fide legal interpretation and the relevant facts are already within the department's knowledge, intent to evade cannot be inferred and the extended period of limitation is not invocable.

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