Inconsistent valuation stand defeats suppression allegation and bars extended limitation, with duty demand and penalty unsustainable.

Where the department had itself insisted on valuation under Section 4A and later shifted to Section 4, non-disclosure of material relevant only to the later method could not amount to suppression of facts. The extended period of limitation was therefore unavailable, and the duty demand based on that allegation could not survive. As the penalty rested on the same suppressed-facts allegation, it was also not sustainable. The CESTAT thus treated the inconsistent departmental valuation stand as fatal to the invocation of extended limitation and penalty.

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Issues: Whether the demand of duty and penalty for the period 1.7.1998 to 12.7.1998 were sustainable when the department invoked the extended period of limitation on the basis of alleged suppression of facts and claimed excess deduction in valuation.

Analysis: The department had initially directed payment on the basis of MRP under Section 4A and later changed its stand to valuation under Section 4. In those circumstances, the assessee could not reasonably be charged with suppression for not disclosing information relevant only to Section 4 valuation during the period when the department itself was insisting on assessment under Section 4A. The allegation of suppression was therefore held to be baseless, and once the extended period could not be invoked, the demand founded on that allegation could not survive. The penalty, being dependent on the same foundation, also could not be sustained.

Conclusion: The demand of duty for the short period was unsustainable and the penalties were not leviable; the finding was in favour of the assessee.

Ratio Decidendi: Where the department itself has maintained an inconsistent valuation stand, non-disclosure of material relevant only to the later asserted method of assessment does not amount to suppression justifying the extended period of limitation or penalty.

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