Extended limitation and MEIS scrip validity: Customs could not invoke suppression or deny export incentives without DGFT cancellation.

Extended limitation could not be invoked where a second show cause notice covered the same products and period as an earlier notice, and the relevant export and classification facts were already within departmental knowledge; in those circumstances, suppression or wilful misstatement was not made out, so the demand failed on limitation. Customs also could not deny MEIS benefits or recover duty by reclassifying the export goods when the underlying scrips had not been cancelled or invalidated by the competent DGFT authority; absent such cancellation, Customs could not go behind the foreign trade incentive already granted. The impugned order was therefore unsustainable on limitation and jurisdictional grounds.

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Issues: (i) Whether the extended period of limitation could be invoked for the impugned demand when an earlier show cause notice on the same products and same period had already been issued and the relevant facts were within the department's knowledge; (ii) Whether the Customs authorities could deny MEIS benefits and reclassify the export goods for recovery of duty when the MEIS scrips had not been cancelled or invalidated by the DGFT.

Issue (i): Whether the extended period of limitation could be invoked for the impugned demand when an earlier show cause notice on the same products and same period had already been issued and the relevant facts were within the department's knowledge.

Analysis: The demand rested on a second notice covering the same subject matter and the same period as an earlier notice already issued by another wing of the Customs department. Once the export facts, classification issue, and availment of MEIS benefits were already within departmental knowledge, suppression of facts could not be alleged again to justify extended limitation. The existence of divergent departmental views on classification further negated the allegation of wilful suppression or misstatement.

Conclusion: The extended period of limitation was not invocable, and the demand failed on limitation.

Issue (ii): Whether the Customs authorities could deny MEIS benefits and reclassify the export goods for recovery of duty when the MEIS scrips had not been cancelled or invalidated by the DGFT.

Analysis: MEIS scrips are issued under the foreign trade regime, and cancellation or invalidation must be undertaken by the competent authority under that regime. In the absence of any adjudication by the DGFT canceling the scrips, Customs could not independently question the validity of the scrips, go behind the incentive already granted, or use reclassification of exports as a basis to deny the benefit. The Tribunal treated the earlier decision in the appellants' own matter as fully applicable and followed the same jurisdictional principle.

Conclusion: The Customs authorities lacked authority to deny the MEIS benefit or sustain recovery on that basis absent DGFT cancellation of the scrips.

Final Conclusion: The impugned order was unsustainable on both limitation and jurisdictional grounds, and the appeal succeeded with consequential relief.

Ratio Decidendi: When the relevant facts are already within the department's knowledge and an earlier notice on the same issue and period has been issued, extended limitation cannot be invoked on the basis of suppression or misstatement; further, Customs cannot deny or recover export incentive benefits granted under the foreign trade regime unless the competent DGFT authority has first cancelled or invalidated the underlying scrips.

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