Wilful suppression and residuary valuation justify extended limitation and best-judgment excise assessment.

Extended limitation under the Central Excise Act requires a positive act of wilful misstatement or deliberate suppression with intent to evade duty; mere omission is insufficient. On the facts described, the assessee's price declaration was treated as misleading because the supporting annexure, project material, and rate guidance showed comparable valuation data and exposed a hybrid cost-based approach, so invocation of the extended period was upheld. For valuation, rule 6(b) applies only where goods are captively used in the contemplated manner and comparable pricing is unavailable; where goods are cleared for contract execution and market or project-based comparables exist, the residuary best-judgment rule under rule 7 applies. The departmental valuation and demand were sustained.

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Issues: (i) Whether the extended period of limitation under the proviso to section 11A(1) of the Central Excise Act, 1944 could be invoked on the basis of wilful misstatement and suppression of facts. (ii) Whether the department was justified in determining valuation under rule 7 of the Central Excise (Valuation) Rules, 1975 instead of rule 6(b).

Issue (i): Whether the extended period of limitation under the proviso to section 11A(1) of the Central Excise Act, 1944 could be invoked on the basis of wilful misstatement and suppression of facts.

Analysis: The applicable standard is that the department must establish a positive act of wilful misstatement or deliberate suppression with intent to evade duty. Mere omission or inaction is not enough. On the facts, the assessee filed the price list in a form suggesting absence of comparable prices, but the annexure showed a cost-based valuation without the required profit element, and the project documents and rate guidance made comparability known. The valuation method adopted was held to be a misleading hybrid approach.

Conclusion: The extended period of limitation was validly invoked, and the finding of wilful misstatement and suppression was upheld against the assessee.

Issue (ii): Whether the department was justified in determining valuation under rule 7 of the Central Excise (Valuation) Rules, 1975 instead of rule 6(b).

Analysis: Rule 6(b) applies where excisable goods are not sold but are used or consumed in the production or manufacture of other articles, with valuation first on comparable goods and, failing that, on cost of production plus profit. The Court found that the goods were not shown to be in the kind of captive consumption contemplated by rule 6(b), that comparable pricing was available from project reports and rate analysis, and that the assessee's own materials demonstrated that the goods were cleared from the factory for contract execution. In that situation, rule 7 operated as the residuary best-judgment provision.

Conclusion: Valuation under rule 7 was /justified, and rule 6(b) was held inapplicable.

Final Conclusion: The assessee failed to establish any error in the demand and valuation findings, and the departmental action sustaining the demand was upheld in full.

Ratio Decidendi: For invocation of the extended period and residuary valuation, the department must show deliberate misstatement or suppression with intent to evade duty, and where the assessee's declared basis is misleading while comparable valuation data exists, best-judgment valuation under the residuary rule is permissible.

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