Limitation and exemption interpretation bar a duty demand where fraud or suppression is not pleaded and melting scrap is broadly covered.

A duty demand raised beyond the normal six-month period could not be sustained for the earlier period because the show cause notice did not allege fraud, suppression of facts or wilful misstatement, so the extended limitation period was unavailable. The exemption issue was also resolved in favour of the assessee: steel ingot inputs fell within the notification, and the expression "melting scrap" was not to be narrowly confined where the notification used broad language and the administrative clarification treated it in a wider sense. The demand therefore failed on limitation for the earlier period and on merits for the remaining issue.

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Issues: (i) Whether the duty demand for the period prior to December 1982 was barred by limitation in the absence of allegations of fraud, suppression or wilful misstatement in the show cause notice; (ii) Whether the inputs used in the manufacture of steel ingots were eligible for the benefit of the exemption notification and whether the term "melting scrap" could be narrowly restricted.

Issue (i): Whether the duty demand for the period prior to December 1982 was barred by limitation in the absence of allegations of fraud, suppression or wilful misstatement in the show cause notice.

Analysis: The demand was raised beyond the normal six-month period. The show cause notice did not specifically allege fraud, suppression of facts or wilful misstatement. In the absence of such allegations, the longer period could not be invoked for the earlier part of the demand.

Conclusion: The demand for the period prior to December 1982 was hit by limitation and was not sustainable.

Issue (ii): Whether the inputs used in the manufacture of steel ingots were eligible for the benefit of the exemption notification and whether the term "melting scrap" could be narrowly restricted.

Analysis: The notification permitted exemption for steel ingots manufactured from specified materials including melting scrap. The Board's clarification and trade notice showed that the expression "melting scrap" was understood in a wider sense. The notification also used broad language and did not justify an artificial restriction excluding billet cuttings and similar re-usable material from the eligible category.

Conclusion: The inputs were covered by the notification and the duty demand on merits was unsustainable.

Final Conclusion: The impugned demand failed on limitation for the earlier period and also on merits, so the order of confirmation was set aside and relief followed accordingly.

Ratio Decidendi: A duty demand beyond the normal limitation period cannot be sustained unless the show cause notice specifically alleges fraud, suppression of facts or wilful misstatement, and an exemption notification using broad eligible-input language should not be artificially narrowed contrary to the administrative clarification adopted by the authorities.

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