Bona fide belief on non-dutiability defeats extended limitation where prior departmental treatment created genuine uncertainty.

A bona fide belief that a product was not excisable can defeat invocation of the extended period of limitation where the product had earlier been treated as non-dutiable and duty was demanded only after later tariff clarification and trade notices. On these facts, the Department could not establish the conditions required for the extended period, because the assessee's non-payment was supported by a reasonable and contemporaneous belief that no duty was payable. The demand was therefore time-barred, and relief was granted on limitation without examination of the merits.

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Issues: Whether the demand was barred by limitation on the ground that the assessee entertained a bona fide belief that the product was not excisable, so that the extended period was unavailable to the Department.

Analysis: The product had earlier not been treated as dutiable, and the record showed that duty was not demanded until the later tariff clarification and trade notices. In these circumstances, the assessee's belief that the product remained non-dutiable was held to be reasonable and bona fide. On those facts, the Department could not establish the conditions necessary to invoke the extended period of limitation.

Conclusion: The extended period of limitation was not available to the Department, and the demand was time-barred; the appeal was therefore allowed on limitation without entering the merits.

Ratio Decidendi: Where the assessee's non-payment of duty is supported by a reasonable bona fide belief arising from the prior treatment of the product and contemporaneous departmental uncertainty, the extended period of limitation cannot be invoked.

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