Misdeclaration and limitation barred customs duty demand, confiscation, and penalty where no proof of higher engine capacity existed.

Confiscation, differential customs duty and penalty were unsustainable where the importer's invoice and the manufacturer's communication consistently described the vehicle as an Audi 80 with 1595 cc engine capacity, and the department produced no testing or other evidence of a higher capacity. In the absence of proof of misdeclaration or suppression, the extended period of limitation could not be invoked against the importer, and a show cause notice issued nearly three years after clearance was time-barred. As the duty demand failed, the connected penal consequences also could not survive, and the relief was granted to the assessee.

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Issues: Whether the car imported by the assessee was liable to confiscation and differential duty on the allegation of misdeclaration of engine capacity, and whether the demand and penalty were sustainable in the absence of proof and in view of limitation.

Analysis: The importer had purchased the vehicle directly from the manufacturer, and the invoice and the manufacturer's communication consistently showed the car as an Audi 80 with engine capacity of 1595 CC. The vehicle was not tested by the departmental authorities, and there was no evidence that it had an engine capacity above 1600 CC. The finding of misdeclaration, therefore, was unsupported. Once no suppression or misdeclaration was established, the show cause notice issued nearly three years after clearance was barred by limitation and the extended period could not be invoked. In the absence of a valid demand for differential duty, the penal consequences also could not survive.

Conclusion: The confiscation, duty demand, and penalty were unsustainable and were set aside in favour of the assessee.

Final Conclusion: The assessee succeeded and the Revenue's challenge failed, with consequential relief following from the setting aside of the adjudication order as it related to the imported car.

Ratio Decidendi: A demand for differential customs duty and the connected confiscation and penalty cannot be sustained without proof of misdeclaration, and the extended period of limitation is unavailable where suppression is not established.

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