Suppression of facts in excise valuation justified extended limitation and sustained demand and penalty.

The extended period of limitation under the proviso to section 11A(1) of the Central Excise Act was held invocable where the assessee excluded other works overhead from assessable value despite it forming part of conversion cost. A claim of bona fide reliance on the principal manufacturer's cost audit report was rejected because the assessee prepared the final costing and its own chartered accountant submitted it to the Department. On the record, the omission was treated as more than inadvertence; the facts showed suppression of relevant particulars with intent to evade duty. The demand and penalty were therefore upheld.

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Issues: Whether the extended period of limitation under the proviso to section 11A(1) of the Central Excise Act could be invoked for recovery of differential duty in respect of assessable value, and whether the assessee had suppressed facts with intent to evade duty.

Analysis: The assessee had not included the element of other works overhead in the assessable value, though it formed part of the conversion cost. The plea of bona fide reliance on the cost audit report supplied by the principal manufacturer was not accepted, because the final costing was worked out by the assessee and its own chartered accountant submitted the costing to the Department. On the record, the omission was not a mere inadvertence. The facts supported the conclusion that the assessee had suppressed the relevant particulars and had not paid the differential duty at the end of each accounting year. The invocation of the extended period was therefore justified.

Conclusion: The extended period of limitation was rightly invoked and the demand and penalty were upheld, the appeal failing in favour of the Revenue.

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