Aggregate clearances under exemption notifications and non-disclosure of common proprietorship justified extended limitation and penalties.

Exemption clearances from multiple units under the same proprietorship had to be aggregated under the notification, so separate exemption claims for each unit were not permissible and the challenge on merits failed. The extended limitation period was also invocable because the common proprietorship and relevant exemption facts were not disclosed to the department, and routine declarations and returns were not treated as full disclosure of material facts. The demands and penalties were sustained, with the assessee allowed the statutory option of reduced penalty compliance under Section 11AC.

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Issues: (i) Whether clearances from two units under the same proprietorship were required to be clubbed for determining eligibility to exemption under the relevant notifications; (ii) Whether the extended period of limitation was invocable on the facts of the case.

Issue (i): Whether clearances from two units under the same proprietorship were required to be clubbed for determining eligibility to exemption under the relevant notifications.

Analysis: The relevant notification condition provided that where a manufacturer clears specified goods from one or more factories, the exemption applies to the aggregate value of clearances and not separately to each factory. Since both units were under the same proprietorship, separate availment of exemption for each unit was not permissible. The reliance placed on contrary precedent was held inapplicable because that case involved units owned by different persons.

Conclusion: The clearances were rightly clubbed and the assessee's challenge on merits failed.

Issue (ii): Whether the extended period of limitation was invocable on the facts of the case.

Analysis: The units were not disclosed to the department as being under the same proprietorship while availing exemption under the notifications. The department came to know of the relevant facts only on scrutiny of records, and the regular declarations and returns were held not to amount to full disclosure of the material facts. The cited precedent was distinguished on the ground that the facts there were already within the department's knowledge.

Conclusion: The extended period of limitation was validly invoked.

Final Conclusion: The demands and penalties were sustained, while the assessee was granted the statutory opportunity of reduced penalty compliance under Section 11AC.

Ratio Decidendi: Where exemption notifications require aggregation of clearances from one or more factories, units under the same proprietorship cannot claim separate exemptions, and non-disclosure of that material fact justifies invocation of the extended limitation period.

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