Full disclosure defeats extended limitation where exemption is wrongly claimed, and associated confiscation and penalties may fall away.

Full disclosure of the relevant product and facts to the department means a mere incorrect claim to exemption or concessional duty does not amount to suppression or wilful misstatement for invoking the extended limitation period. On that basis, the demand beyond the normal period was held time-barred. The confiscation of plant, machinery, land and building was consequently found unsustainable, and the manager's penalty was also set aside. Any surviving duty was directed to be re-quantified by the original authority, with consequential penalty and interest left open to challenge before that authority.

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Issues: (i) whether the extended period of limitation could be invoked for the duty demand on the ground of suppression or misstatement when the declaration and relevant facts were already furnished to the department; and (ii) whether the confiscation and penalties imposed on the unit and its manager could be sustained.

Issue (i): whether the extended period of limitation could be invoked for the duty demand on the ground of suppression or misstatement when the declaration and relevant facts were already furnished to the department.

Analysis: The relevant product had been declared for availing concessional duty under the notifications, and the demand was founded on scrutiny of that very declaration. Mere wrong availment of an exemption or concessional notification, in the presence of full disclosure of facts, does not amount to suppression or wilful misstatement so as to justify invocation of the longer limitation period. Since the department was in possession of the material facts, the notice could have been issued earlier.

Conclusion: The demand beyond the normal limitation period was time-barred and could not be sustained.

Issue (ii): whether the confiscation and penalties imposed on the unit and its manager could be sustained.

Analysis: Once the main demand was held barred by limitation to the extent examined, the confiscation of plant, machinery, land and building was found unsustainable. The penalty on the manager was also held to lack justification. The remaining duty, if any, required fresh quantification by the original authority, and the appellant was left free to contest any consequential penalty and interest before that authority.

Conclusion: The confiscation and penalty on the manager were set aside, and the matter was remanded for quantification of the surviving demand.

Final Conclusion: The appeals succeeded in part: the extended limitation plea was accepted, the impugned order was set aside to that extent, confiscation and the manager's penalty were annulled, and the surviving demand was sent back for quantification.

Ratio Decidendi: A mere erroneous claim to exemption or concessional duty, when the relevant facts have been disclosed to the department, does not by itself constitute suppression or wilful misstatement for invoking the extended period of limitation.

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