Stock transfer from FTWZ defeats SAD exemption; extended customs limitation fails absent suppression or wilful misstatement.

Exemption from Special Additional Duty under Notification No. 45/2005-Customs was unavailable where goods were transferred from a Free Trade Warehousing Zone to the importer's factory by stock transfer for blister packing, because the notification required a sale in the Domestic Tariff Area attracting Sales Tax or VAT and no intervening sale occurred at the import stage. The extended limitation period under Section 28(4) of the Customs Act could not be invoked, as the record showed prior declarations and correspondence that negatived collusion, wilful misstatement, or suppression of facts. The demand was therefore time-barred and the duty, interest, and penalties could not stand.

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Issues: (i) Whether exemption from Special Additional Duty under Notification No. 45/2005-Customs dated 16.05.2005 was available when imported goods were stock transferred from a Free Trade Warehousing Zone to the importer's factory for blister packing before sale. (ii) Whether the show cause notice invoking the extended period of limitation under Section 28 of the Customs Act, 1962 was sustainable.

Issue (i): Whether exemption from Special Additional Duty under Notification No. 45/2005-Customs dated 16.05.2005 was available when imported goods were stock transferred from a Free Trade Warehousing Zone to the importer's factory for blister packing before sale.

Analysis: The notification granted exemption subject to the condition that the imported goods be sold in the Domestic Tariff Area and that such sale attract Sales Tax or VAT. The goods in question were moved from the Free Trade Warehousing Zone to the factory by way of stock transfer, without an intervening sale. The subsequent sale of the blister-packed medicaments did not satisfy the condition attached to the import stage movement of the goods. The cited decisions on which reliance was placed were treated as distinguishable on facts.

Conclusion: The exemption under Notification No. 45/2005-Customs dated 16.05.2005 was not available to the appellants.

Issue (ii): Whether the show cause notice invoking the extended period of limitation under Section 28 of the Customs Act, 1962 was sustainable.

Analysis: The relevant clearances had taken place between 27.12.2012 and 01.08.2013, whereas the show cause notice was issued on 02.06.2015. The normal period under Section 28(1)(a) is one year, and the extended period under Section 28(4) is available only where non-payment is attributable to collusion, wilful misstatement, or suppression of facts. The record showed prior declarations by the appellants and correspondence with customs and commerce authorities regarding the exemption issue, which negatived the ingredients required for invoking the extended period.

Conclusion: The demand was time-barred and the extended period under Section 28(4) of the Customs Act, 1962 could not be invoked.

Final Conclusion: The appeals succeeded on limitation, and the adjudication confirming duty, interest, and penalties could not stand.

Ratio Decidendi: Exemption conditioned on sale in the Domestic Tariff Area cannot be claimed on a mere stock transfer, and the extended period of limitation under customs law is invocable only on proof of collusion, wilful misstatement, or suppression of facts.

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