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Issues: (i) Whether the demand of duty for the period up to 1-3-1986 was barred by limitation and the extended period could be invoked on the ground of suppression or misdeclaration; (ii) Whether duty was payable for the period from 1-3-1986 to 14-4-1986.
Issue (i): Whether the demand of duty for the period up to 1-3-1986 was barred by limitation and the extended period could be invoked on the ground of suppression or misdeclaration.
Analysis: The material on record showed that the Department had been aware of the manufacture and treatment of the product over a long period, had repeatedly considered its classification, and had approved classification lists from time to time. The product had also been treated earlier as non-excisable or exempt, and the assessee had proceeded on the basis of such approvals and departmental communications. In these circumstances, the facts necessary for invoking the extended period of limitation could not be said to have been wilfully suppressed or misdeclared.
Conclusion: The demand for the period up to 1-3-1986 was time-barred and the extended period could not be invoked against the assessee.
Issue (ii): Whether duty was payable for the period from 1-3-1986 to 14-4-1986.
Analysis: For the post 1-3-1986 period, the tariff position had changed and the classification list for the subsequent period had been provisionally approved, putting the assessee on notice. The assessee also did not challenge the impugned order on merits as regards this period.
Conclusion: Duty was payable for the period from 1-3-1986 to 14-4-1986.
Final Conclusion: The appeal succeeded only in part: the duty demand for the earlier period was set aside as time-barred, while liability was maintained for the later period after the tariff change.
Ratio Decidendi: Where the Department has long been aware of the activity and has repeatedly approved the assessee's classification, the extended period for demand cannot be invoked in the absence of wilful suppression or misdeclaration.
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