Extended limitation under central excise law requires proof of suppression; disclosed declarations kept the demand time-barred.

Extended limitation under central excise law applies only where the Department proves suppression of facts, wilful misstatement, fraud, or collusion with intent to evade duty. Where the assessee has filed statutory declarations, disclosed project particulars, and supported a request for duty-free clearances, and the Department does not show that the declarations were false or rejected, the proviso to the limitation provision cannot be invoked. On those facts, the demand was time-barred and the penalty could not survive.

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Issues: Whether the demand was barred by limitation and whether the extended period under the central excise law could be invoked in the absence of suppression of facts or wilful misstatement.

Analysis: The relevant clearances related to a period beyond the normal limitation period, but the notice was issued after the expiry of one year. The respondents had filed statutory declarations claiming exemption, disclosed the project particulars, and sought permission for duty-free clearances with supporting documents. The Department did not show that the request was rejected or that the declarations were false. In these circumstances, the Department failed to establish suppression of facts, wilful misstatement, fraud, or collusion so as to attract the proviso to the limitation provision.

Conclusion: The demand was rightly held to be time-barred and the extended period could not be invoked.

Final Conclusion: The appeal failed and the order setting aside the demand and penalty was sustained.

Ratio Decidendi: The extended period of limitation under central excise law can be invoked only on proof of suppression of facts, wilful misstatement, fraud, or collusion with intent to evade duty; where the assessee has made relevant disclosures and the Department does not rebut them, the demand is barred by limitation.

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