Extended limitation and customs exemption claim fail without proof of notice service or factual basis for denial of benefit

Duty demand based on alleged wrongful denial of Notification No. 203/92 was found unsustainable because the record did not clearly show service of the show-cause notice and the notice itself gave no factual basis for alleging that Modvat credit had been availed at the relevant time. In the absence of such foundation, invocation of the extended period under the proviso to section 28(1) of the Customs Act was not justified. The Commissioner's order was set aside and the appeal was allowed.

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Issues: Whether the demand of duty could be sustained on the ground that the benefit of Notification No. 203/92 was wrongly denied, and whether the extended period under section 28(1) of the Customs Act could be invoked in the absence of clear proof of receipt of the show-cause notice and any basis for alleging availment of Modvat credit at the relevant time.

Analysis: The demand was founded on the premise that the appellant was not entitled to the notification benefit because Modvat credit had been availed. The record did not disclose clear evidence that the show-cause notice had been received by the appellant. The notice produced before the Tribunal was found to be a stereotyped form notice, containing no factual basis to show that Modvat credit had been availed when the goods were exported and no basis to justify invocation of the extended period under the proviso to section 28(1) of the Customs Act, 1962.

Conclusion: The duty demand was not sustainable and the order of the Commissioner was set aside; the appeal was allowed.

Ratio Decidendi: A demand under the extended period cannot be sustained where the record does not show service of the notice on the assessee and the notice itself discloses no factual foundation for invoking the extended period or denying the exemption benefit.

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