Extended customs limitation and MRP assessment rules hinge on disclosure, intent to evade, and industrial consumer status.

Extended limitation under section 28(4) of the Customs Act applies only where non-levy or short-levy results from collusion, wilful misstatement, or suppression of facts with intent to evade duty; mere non-payment or a bona fide interpretative dispute is insufficient. On the facts described, disclosure to Customs and the absence of deliberate concealment meant the extended period could not be invoked for the pre-14.05.2015 demand. After the 14.05.2015 amendment to rule 2(bb) of the Legal Metrology (Packaged Commodities) Rules, imported parts supplied to industrial consumers, used for their own consumption and marked "not for retail sale," fell outside MRP-based assessment, so post-amendment demand was also unsustainable.

---

---

Issues: (i) Whether the extended period of limitation under section 28(4) of the Customs Act, 1962 could be invoked for the demand covering the period prior to 14.05.2015; (ii) Whether, after the amendment to rule 2(bb) of the Legal Metrology (Packaged Commodities) Rules, 2011 with effect from 14.05.2015, the imported parts supplied to industrial consumers could still be subjected to MRP-based assessment.

Issue (i): Whether the extended period of limitation under section 28(4) of the Customs Act, 1962 could be invoked for the demand covering the period prior to 14.05.2015.

Analysis: The extended period under section 28(4) applies only where non-levy or short-levy is attributable to collusion, wilful misstatement, or suppression of facts with intent to evade duty. Mere non-payment is insufficient. The record showed that the importer had disclosed its valuation position to Customs authorities, sought guidance, and in one instance cleared goods after departmental query on transaction value. The show cause notice and the adjudication record did not establish any deliberate concealment or positive act of evasion. The dispute was substantially one of interpretation and bona fide understanding of the legal position.

Conclusion: The extended period of limitation was not available to the Revenue, and the demand for the pre-14.05.2015 period could not be sustained.

Issue (ii): Whether, after the amendment to rule 2(bb) of the Legal Metrology (Packaged Commodities) Rules, 2011 with effect from 14.05.2015, the imported parts supplied to industrial consumers could still be subjected to MRP-based assessment.

Analysis: After 14.05.2015, the definition of industrial consumer expressly included purchases from an importer, subject to use by the industry and the package carrying the declaration "not for retail sale". The adjudicating authority found that the buyers were industrial consumers, that the goods were used for their own consumption, and that the relevant marking was present on the packages. No material was shown to dislodge those findings. On that basis, the goods fell outside MRP-based assessment for the post-amendment period.

Conclusion: MRP-based assessment was not justified for the period from 14.05.2015 onwards, and the demand dropped for that period was not liable to be restored.

Final Conclusion: The demand was unsustainable for both the pre-amendment and post-amendment periods, and the consequential penalty on the individual appellant also failed.

Ratio Decidendi: Extended limitation under customs law requires deliberate suppression or wilful misstatement with intent to evade duty, and where the legal-metrology regime expressly covers purchases from importers for industrial use, MRP-based assessment cannot survive once the statutory conditions for industrial consumer status are satisfied.

---