Extended limitation cannot be invoked where material facts were known and classification remained under bona fide dispute.

Where the department was already aware of the nature and use of the goods and could have verified classification by sampling, a mere allegation of misdeclaration did not justify invoking the extended limitation period. Because the classification dispute remained unresolved for a substantial time and assessments were finalised while it was pending, the record did not show suppression or intent to evade duty. The demand was therefore time-barred and the extended period of limitation was not invocable.

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Issues: Whether the demand was barred by limitation and the extended period could be invoked on the allegation of misdeclaration.

Analysis: The department was aware of the nature and use of the product throughout the relevant period and had opportunities to verify its classification by drawing samples. The classification dispute itself remained unresolved for a substantial time, and the assessments were finalised while the dispute was pending. In these circumstances, the record did not support an that the assessee had misrepresented facts to evade duty so as to justify invocation of the extended limitation period.

Conclusion: The extended period of limitation was not invocable and the demand was time-barred, in favour of the assessee.

Ratio Decidendi: Where the department is already aware of the material facts and the classification of the goods is still under bona fide dispute, the extended period for recovery cannot be invoked on a mere allegation of misdeclaration or evasion.

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