Extended Limitation for Suppression of Material Facts Sustained Despite Departmental Audit Knowledge in Central Excise Valuation

Non-inclusion of the amortised cost of dies and moulds in the assessable value of motor vehicle parts, without disclosure to the department, was treated as suppression of material facts. The limitation period under Section 11A(3)(ii) of the Central Excise Act, 1944 was held to run from the relevant date, and the statute was applied as not requiring departmental knowledge to negate invocation of the extended period. Departmental audit of records did not cure the omission. On that basis, the extended period of limitation was held rightly invocable and the demand could not be treated as time-barred.

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Issues: Whether the extended period of limitation could be invoked for demanding duty when the assessee had not included the amortised cost of dies and moulds in the assessable value of motor vehicle parts, and whether departmental knowledge from audit could defeat such invocation.

Analysis: The assessee supplied motor vehicle parts manufactured with dies and moulds received on loan basis from the buyer, but did not include the amortised cost of those dies and moulds in the value declared for duty. The record showed no disclosure to the department of this non-inclusion, and the assessee was aware that the purchase orders did not reflect that cost. The legal position applied was that, for computation of limitation under Section 11A(3)(ii) of the Central Excise Act, 1944, the relevant date governs the period and the statute does not import any requirement of departmental knowledge. In these circumstances, the assessee's omission amounted to suppression of material information, and the audit of records did not cure the failure to disclose.

Conclusion: The extended period of limitation was rightly invocable, and the order holding the demand time-barred was unsustainable.

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