Exemption for copper goods with zinc was denied where alloys were made, but limitation failed due to a supporting circular.

Benefit under Notification No. 118/88 was discussed in relation to copper and copper articles containing significant zinc content. The notification was treated as inapplicable where zinc was used in substantial quantities to manufacture copper alloys, since predominant copper content alone did not create an unconditional exemption. On limitation, a long-standing departmental circular supporting the assessee's understanding of exemption availability was treated as negating intent to evade duty, so the extended period could not be invoked and the demand was time-barred.

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Issues: (i) Whether copper and copper articles containing zinc in significant quantities could still qualify for the benefit of Notification No. 118/88; (ii) whether the demand was barred by limitation because the extended period could not be invoked.

Issue (i): Whether copper and copper articles containing zinc in significant quantities could still qualify for the benefit of Notification No. 118/88?

Analysis: The benefit of the notification was discussed in the context of Chapter 74 goods and the Board's circular. A distinction was drawn between small additions of other metals made as a technological necessity and the use of substantial quantities of zinc to produce copper alloys. The notification was held not intended to extend to cases where the added metal was not merely incidental or technologically necessary, but was used to manufacture copper alloys.

Conclusion: The assessee was not accepted as having an unconditional entitlement to the notification merely because copper remained predominant.

Issue (ii): Whether the demand was barred by limitation because the extended period could not be invoked?

Analysis: The Board's circular took a view favourable to the assessee and had been in force long before the clearances in question. In view of the long-standing circular, manufacturers could reasonably have believed that the notification benefit was available in such circumstances, negativing an intention to evade duty. On that basis, the extended period was held unavailable.

Conclusion: The demand was time-barred and the extended period of limitation could not be applied.

Final Conclusion: The appeal succeeded on limitation, the impugned order was set aside, and consequential relief followed.

Ratio Decidendi: A long-standing departmental circular that reasonably supports the assessee's understanding of exemption availability can negate intent to evade duty and prevent invocation of the extended limitation period.

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