Extended limitation under section 11A fails where captive clearances were disclosed and no suppression or intent to evade was shown.

The extended limitation period under section 11A could not be invoked for duty demands relating to captive clearances made before March 2004, because the assessee had paid duty on intra-divisional clearances, filed monthly returns, and the department was already aware of the transactions. On the facts, the authorities accepted that there was no suppression of facts or mala fide intent to evade duty, and the valuation adopted could have been verified by the department earlier. The demand for the prior period was therefore held unsustainable, as knowledge of the clearances and absence of suppression barred reliance on the extended period.

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Issues: Whether the extended period of limitation under section 11A could be invoked to sustain demand of duty for the period prior to March 2004 on the ground of suppression of facts and alleged undervaluation in respect of clearances made for captive consumption.

Analysis: The goods were cleared on payment of duty for use within the assessee's own divisions and there was no sale. The assessee was a Government company and had filed monthly returns with the department. On the facts found, the department had knowledge of the transactions and could have verified the valuation adopted, but did not do so. In these circumstances, the finding of the lower authorities that there was no mala fide intention to evade duty and no suppression of facts was accepted.

Conclusion: The extended period of limitation was not invokable and the demand for the period prior to March 2004 was not sustainable.

Ratio Decidendi: Where the department has knowledge of captive clearances reflected in regular returns and no suppression or intent to evade is established, the extended limitation period cannot be used to raise a duty demand under section 11A.

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