Extended limitation rejected for bona fide technical dispute, while duty on unaccounted synthesis gas loss was limited to the normal period.

Extended limitation could not be invoked where the record showed a bona fide technical dispute between the parties and the Department over the actual loss of synthesis gas, so wilful suppression was not established. Duty liability on the unaccounted loss of gas returned from the heavy water plant was nevertheless recognised against the consignor, because the supply-and-return arrangement contemplated a process loss and the facts differed from cases of mere non-accounted clearances. The demand was therefore confined to the normal limitation period only, with the exact duty to be recomputed for the admissible period after hearing the appellant.

---

---

Issues: (i) Whether the extended period of limitation could be invoked on the allegation of wilful suppression or misrepresentation regarding the loss of synthesis gas; (ii) whether duty in respect of the loss of synthesis gas returned from the heavy water plant could be demanded from the consignor; (iii) the extent of the duty demand, if any, payable for the relevant period.

Issue (i): Whether the extended period of limitation could be invoked on the allegation of wilful suppression or misrepresentation regarding the loss of synthesis gas.

Analysis: The record showed correspondence between the parties and the Department concerning the quantum of loss, with disagreement persisting between the appellant and the heavy water plant on the actual loss in the process. The material indicated a bona fide technical dispute rather than concealment of facts. In such circumstances, the allegation of wilful suppression was not sustainable for the purpose of invoking the longer limitation period.

Conclusion: The extended period of limitation was not available to the Department.

Issue (ii): Whether duty in respect of the loss of synthesis gas returned from the heavy water plant could be demanded from the consignor.

Analysis: The arrangement and the exemption notification contemplated supply of synthesis gas for extraction of heavy hydrogen and return of the gas to the appellant, with a recognised element of loss in the process. The Tribunal noted that the facts were not identical to cases where goods were merely cleared to a consignee under Chapter X procedure and not accounted for. Since the gas was returned after processing, the appellant was not wholly absolved of liability for the unaccounted loss reported from the returned gas.

Conclusion: Duty could be demanded from the appellant, subject to the limitation period and the actual quantum established for that period.

Issue (iii): The extent of the duty demand, if any, payable for the relevant period.

Analysis: Once the extended period was rejected, the demand could survive only for the normal limitation period counted backward from the notice date. The Tribunal therefore confined the demand to the short period immediately preceding the notice and directed the jurisdictional authority to recompute the duty in accordance with law after giving the appellant an opportunity of hearing.

Conclusion: The demand was restricted to the period 16 July 1986 to 14 September 1986 and the matter was remanded for fresh computation.

Final Conclusion: The appellant succeeded on limitation, while the duty liability was upheld only for the admissible normal period and the matter was sent back for re-determination of the exact amount payable.

---