Extended limitation cannot apply where the manufacturing process and intermediate product were fully disclosed to the department.

When the manufacturing process and the intermediate product were disclosed to the department through declarations verified by the Range Officer, there was no basis to allege wilful suppression or deliberate misstatement. On those facts, the extended period of limitation could not be invoked for the duty demand and penalty. The tribunal held that the disclosure of the process and the treatment of Ghan as an intermediate product negated the jurisdictional basis for extended limitation, so the demand was time-barred and the penalty could not stand.

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Issues: Whether the extended period of limitation could be invoked for the duty demand and penalty when the manufacturing process and the intermediate product were disclosed to the department.

Analysis: The appellants had filed declarations describing the manufacturing process of the final product, and the process was verified by the Range Officer. Those declarations showed that Ghan was an intermediate product arising in the course of manufacture of Ayurvedic medicaments. On these facts, there was no basis to hold that the appellants had wilfully suppressed facts or made a deliberate misstatement. In the absence of such conduct, the extended period could not be applied.

Conclusion: The extended period of limitation was not invocable and the entire demand was barred by limitation. The demand and penalty were set aside.

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