Limitation, suppression and exemption withdrawal in duty demand on PVC soles: bona fide belief rejected and penalty reduced.

Demand for duty on PVC soles cleared after withdrawal of an exemption notification was treated as not time-barred, because the record did not support bona fide belief or late knowledge of the rescission. Non-application for licence, failure to file classification lists and omission to account for manufacture in statutory records after withdrawal of exemption were treated as suppression, defeating the limitation plea. The later show cause notice was not considered separate from the earlier one on limitation, since both alleged suppression. The confirmation of duty and confiscation was upheld, while the penalty was reduced.

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Issues: Whether the demand of duty was barred by limitation in view of the assessee's plea of bona fide belief and whether the order confirming duty, confiscation and penalty required interference.

Analysis: The demand arose from manufacture and clearance of PVC soles after withdrawal of the exemption notification. The plea that the trade learnt of the rescission only later was not supported by material. The record showed non-application for licence, non-filing of classification lists and non-accountal of manufacture in statutory records after withdrawal of exemption, supporting suppression and negativing bona fide belief. The second show cause notice was not beyond the earlier notice since both notices alleged suppression. The remand by the appellate authority was not on limitation, but for fresh adjudication by the proper authority.

Conclusion: The demand was held not to be barred by limitation. The confirmation of duty and confiscation was upheld, while the penalty was reduced.

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