Extended limitation for duty demand fails where clearances were recorded and no intent to evade was shown.

Extended limitation for duty demand requires suppression of facts coupled with intent to evade; mere non-payment of duty is insufficient. Where the clearances were recorded in the books of account and the demand was based on those records, the omission was treated as a possible misreading of the exemption notification rather than deliberate suppression. On those facts, invocation of the extended period was not justified, and the demand, interest and penalties were held unsustainable in favour of the assessee.

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Issues: Whether the demand of duty, interest and penalties was correctly confirmed by invoking the extended period of limitation on the ground of suppression and intent to evade duty.

Analysis: The appellant had manufactured and cleared the goods during the relevant period and later approached the Department for registration after crossing the turnover threshold. The clearances were recorded in the books of account and the demand was raised on the basis of those records. On these facts, the non-payment of duty was treated as a possible misreading of the exemption notification rather than wilful suppression or a deliberate attempt to evade duty. The extended period can be invoked only when suppression is accompanied by intent to evade, and mere failure to pay duty is insufficient.

Conclusion: The invocation of the extended period was not justified and the demand, interest and penalties were unsustainable. The finding is in favour of the assessee.

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