Extended limitation for duty demand fails where exports were disclosed and bona fide belief under the exemption notification was established.

Extended limitation for duty demands on clearances to Nepal was not justified where the assessee had disclosed the proposed exports in its Rule 174 declaration, the revenue knew the goods were being cleared without duty, and factory clearances remained below the exemption limit. A Board circular also supported the assessee's bona fide belief that the exports were covered by Notification No. 175/86-C.E. On those facts, suppression and deliberate evasion were not established, so the longer limitation period could not be invoked and the demand was time-barred.

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Issues: Whether the extended period of limitation could be invoked for demand of duty on clearances made to Nepal, in the circumstances of the case.

Analysis: The demand related to exports made to Nepal, and the assessee had disclosed the proposed export clearances in the declaration filed under Rule 174. The revenue was aware that clearances were being made without payment of duty, and the total clearances from the factory were below the exemption limit. A Board's circular also supported the assessee's understanding that such exports would be covered by Notification No. 175/86-C.E., which established a bona fide belief on the part of the assessee. On these facts, suppression or deliberate evasion was not made out, and the longer limitation period was not justified.

Conclusion: The extended period of limitation was not available to the revenue, and the demand was barred by limitation, in favour of the assessee.

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