Extended limitation cannot rest on disclosed valuation and known departmental practice; selective item-wise scrutiny was rejected.

Filed price lists, disclosed assessable value based on landed raw material cost plus conversion charges, and supported valuation with a cost accountant's certificate defeated any inference of suppression or wilful misstatement. As the department was already aware of the valuation method and had earlier issued notices on the same issue, the extended period of limitation could not be invoked, so the demand and penalties were barred. The assessment dispute also had to be examined on the overall valuation position reflected in the cost audit material, rather than by isolating only selected items with lower declared value.

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Issues: Whether the demand and penalty could be sustained by invoking the extended period of limitation on the basis of alleged suppression of facts, and whether the demand was liable to be confined to selected items or had to be tested on an overall assessment of the declared values.

Analysis: The appellants had filed price lists from time to time, declared assessable value on the basis of landed cost of raw materials and conversion charges, and supported the valuation with a cost accountant's certificate. The records showed that the department was aware of the method of valuation and had earlier issued notices on the same subject, including proceedings that were dropped. In these circumstances, there was no basis to infer suppression or wilful misstatement. The demand could not therefore be enlarged by resort to the extended limitation period. The assessment dispute also could not be approached by isolating only those items where the declared value was lower, while ignoring the remaining items and the overall position reflected in the cost audit material.

Conclusion: The demand and penalties were not sustainable as the proceedings were barred by limitation, and the assessee succeeded.

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