Extended limitation in duty demands fails where buyer certificates and records do not show deliberate suppression or intent to evade.

Clearances made on the strength of the buyer department's certificate, treating the goods as complete units, did not justify invocation of the extended period of limitation because the record did not establish deliberate suppression or intent to evade duty. The duty demand was therefore barred by limitation. Once the demand itself failed on limitation, no separate basis remained for penalty, and the absence of proven evasion also defeated penalty. The commentary thus states that, on these facts, extended limitation was unavailable and penalty could not be sustained.

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Issues: (i) Whether the demand of duty for the relevant period was barred by limitation and whether extended limitation could be invoked. (ii) Whether penalty could survive when the duty demand itself was time-barred.

Issue (i): Whether the demand of duty for the relevant period was barred by limitation and whether extended limitation could be invoked.

Analysis: The clearances had already been assessed and the goods were supplied on the basis of the buyer department's certificate treating them as complete units. The record did not show any unassailable material to establish deliberate suppression or intent to evade duty. In these circumstances, the basis for invoking the longer limitation period was absent.

Conclusion: The demand was held to be barred by limitation and extended limitation was not sustainable.

Issue (ii): Whether penalty could survive when the duty demand itself was time-barred.

Analysis: Once the demand itself could not be sustained on limitation, no separate foundation remained for imposing penalty. The finding of any deliberate evasion was also negatived on the facts.

Conclusion: Penalty was held to be unsustainable.

Final Conclusion: The appeal succeeded and the duty demand and penalty did not survive.

Ratio Decidendi: Where clearances are made on the strength of the buyer's certificate and the record does not establish deliberate intent to evade duty, the extended period of limitation cannot be invoked and penalty cannot be sustained.

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