Disclosure in ER-1 returns bars suppression finding and defeats extended limitation and penalty under central excise law.

Disclosure of clearance details and the exemption claim in ER-1 returns prevented any finding of suppression of material facts. On those facts, the department was expected to verify the claim from the statutory records, so the precondition for invoking the extended period of limitation was absent. As suppression was not established, the statutory basis for penalty under section 11AC of the Central Excise Act, 1944 also failed, and the penalty was set aside.

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Issues: Whether the extended period of limitation was invocable in view of the disclosure made in the ER-1 returns and whether penalty under section 11AC of the Central Excise Act, 1944 was sustainable.

Analysis: The appellant had disclosed clearance of mill scale powder iron ash in the ER-1 returns and had claimed exemption under the relevant notification. On these facts, no suppression of material facts was established. Since the department was required to verify the exemption claim from the returns and the record did not show concealment, the precondition for invoking the extended period was absent. In the absence of suppression, the foundation for penalty also did not survive.

Conclusion: The extended period was not attracted and the penalty under section 11AC of the Central Excise Act, 1944 was set aside.

Ratio Decidendi: Where exemption and clearance details are disclosed in statutory returns, suppression cannot be inferred and the extended period of limitation, along with penalty dependent on such suppression, is not sustainable.

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