Extended limitation under excise law unavailable where disclosures were made, making the duty demand time-barred and penalty unsustainable

Classification lists, departmental endorsements, correspondence and clearance declarations showed that the assessee had disclosed the nature of manufacture to the department. On that record, and given the departmental confusion between exempted goods and non-excisable goods, there was no material to infer fraud, collusion, suppression of facts or misstatement. The extended period of limitation under Section 11A was therefore unavailable, so the duty demand was time-barred. As the limitation objection failed, penalty was also not sustainable.

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Issues: Whether the duty demand could be sustained by invoking the extended period of limitation under Section 11A of the Central Excises and Salt Act, and whether penalty was leviable.

Analysis: The classification lists, departmental endorsements, correspondence, and the declaration showing clearances established that the appellants had disclosed the nature of their manufacture to the department. The record also showed a departmental misunderstanding between exempted goods and non-excisable goods, and the clearances of Item 68 goods were not taken into account when exemption eligibility under Notifications No. 71/78 dated 1-3-1978 and No. 80/80 dated 19-6-1980 was examined. In these circumstances, there was no basis to infer fraud, collusion, suppression of facts, or misstatement so as to justify the extended limitation period.

Conclusion: The demand for duty was time-barred and penalty was not sustainable.

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