Mineral water classification and limitation for duty demand: normal-period liability sustained, but extended limitation rejected absent suppression.

Extended limitation for duty demand cannot be invoked on suppression where departmental circulars on classification are inconsistent and not shown to have been effectively communicated, so the demand is confined to the normal period. The product was nevertheless held to fall within the tariff description of mineral water during the relevant period, because its technical character and manufacturing process, including addition of water after demineralisation, did not take it outside that entry. Duty within the normal limitation period was therefore sustainable, while penalty was set aside in view of the prevailing confusion.

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Issues: (i) Whether the extended period for demand could be invoked on the allegation of suppression; (ii) Whether the product manufactured during the relevant period was classifiable as mineral water and liable to duty within the normal period.

Issue (i): Whether the extended period for demand could be invoked on the allegation of suppression.

Analysis: The record showed uncertainty both in the departmental circulars and in the assessee's understanding of the tariff coverage of the product. The Board's clarifications on mineral water had shifted over time, and the relevant circulars had not been shown to have been effectively communicated as trade notices. In these circumstances, the facts did not justify a finding of suppression for invoking the extended limitation period.

Conclusion: The extended period of limitation was not available to the department, and the demand beyond the normal period could not be sustained.

Issue (ii): Whether the product manufactured during the relevant period was classifiable as mineral water and liable to duty within the normal period.

Analysis: The tariff entry, the technical meaning of mineral water, and the process adopted by the assessee showed that the product fell within the description of mineral water during the relevant period. The addition of water after demineralisation to achieve the required parameters did not take the product outside the relevant classification for the normal period.

Conclusion: The product was classifiable as mineral water and the duty demand within the normal period was sustainable.

Final Conclusion: The demand was confined to the normal limitation period, while the penalty was set aside in view of the prevailing confusion.

Ratio Decidendi: Where the tariff description and technical meaning of a product bring it within the taxable entry, duty is sustainable for the normal period, but the extended limitation period cannot be invoked absent suppression when the applicable classification position is unclear and departmental clarifications are inconsistent.

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