Limitation and suppression of facts failed where product disclosure was complete, barring extended-period demand and penalty.

The demand was time-barred because the assessee had disclosed the product as cotton and lycra yarn in the stated ratio, and the absence of a prescribed form requiring further particulars meant there was no legal basis to allege suppression of facts. Correspondence between the parties on classification also negatived concealment, so the extended period under the proviso to Section 11A of the Central Excise Act, 1944 could not be invoked. As the duty demand failed on limitation, the connected penalty was unsustainable and could not be maintained.

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Issues: Whether the demand was barred by limitation for want of suppression of facts so as to justify invocation of the extended period under the proviso to Section 11A of the Central Excise Act, 1944, and whether penalty could survive once the duty demand failed.

Analysis: The declaration filed by the assessee correctly disclosed the nature of the product and its composition as cotton and lycra yarn in the stated ratio. During the relevant period there was no prescribed form requiring disclosure of the yarn's characteristics or intended use, and failure to furnish particulars not legally required cannot amount to suppression of facts. The record also showed correspondence between the parties on classification, which negatived any inference of concealment. In the absence of suppression, the extended period could not be invoked. Once the duty demand was held unsustainable on limitation, the penalty also could not be maintained.

Conclusion: The demand was barred by limitation and was rightly set aside; the penalty was also unsustainable.

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