Advance disclosure defeats extended limitation where free-supply valuation was fully disclosed to excise authorities.

Advance disclosure of the valuation method and the fact that customers supplied certain raw materials and components free of cost prevented invocation of the extended limitation period under excise law. Because the assessee had informed the proper excise officer in writing before the notice was issued, the non-inclusion of the free-supply value was fully disclosed. In the absence of suppression, fraud, collusion, or wilful misstatement, the show cause notice could not rely on the proviso to Section 11A. The notice was therefore time-barred and the extended period was unsustainable.

---

---

Issues: Whether the show cause notice invoking the extended period of limitation was barred by time in the absence of suppression or misstatement of facts by the assessee.

Analysis: The assessee had informed the department in writing that certain raw materials and components were supplied free of cost by customers and that such value was not to be added to the assessable value. The communication was made to the proper excise officer well before issuance of the notice. On these facts, the non-inclusion of the value of such free supplies was fully disclosed to the department. In the absence of suppression, fraud, collusion, or wilful misstatement, the extended period under the proviso to Section 11A could not be invoked.

Conclusion: The notice was time-barred and the invocation of the extended period was unsustainable. The finding was in favour of the assessee.

Ratio Decidendi: Where the relevant facts are disclosed to the department in advance, the extended period of limitation under excise law cannot be invoked merely because the department later disputes the valuation method.

---