Extended limitation for suppression fails where classification was disclosed and no wilful intent to evade duty was shown.

The extended period of limitation under the proviso to Section 11A of the Central Excise Act, 1944 could not be invoked because the assessee had consistently disclosed the classification position and the dispute was rooted in a bona fide classification controversy known in the trade. Suppression must be deliberate and wilful, with intent to evade duty; a mere disputed classification issue or omission without mala fide intent does not qualify. As there was no positive act to conceal material facts, the demand was time-barred. The penalty also could not survive because it was consequential to the unsustainable demand.

---

---

Issues: Whether the demand could be sustained by invoking the extended period of limitation on the ground of suppression of facts and whether penalty could survive in the absence of such suppression.

Analysis: The record showed that the assessee had consistently disclosed the classification position and the controversy in the trade itself created a bona fide doubt as to the correct classification of the product. The governing principle under the proviso to Section 11A of the Central Excise Act, 1944 is that suppression must be deliberate and wilful, with intent to evade duty, and mere omission or a disputed classification position known to both sides does not amount to suppression. In the absence of any mala fide or positive act to conceal material facts, the extended period could not be applied. The same foundation governed the penalty proceedings, which were only consequential to the demand.

Conclusion: The invocation of the extended period of limitation was not sustainable and the demand was time-barred. The assessee succeeded, and the penalty also failed.

---