Extended limitation, deemed credit, and penalty fail where declarations rely on supplier data without suppression or collusion.

Where an assessee filed price declarations on the basis of data supplied by a merchant manufacturer and no material showed suppression, misdeclaration, collusion or mala fide intent, the extended period of limitation could not be invoked and the demand beyond the normal period failed. On the same facts, deemed credit under the notification could not be denied merely because the raw material value was wrongly declared by another party, and penalty also could not be sustained in the absence of deliberate evasion or culpable conduct. The normal-period duty demand remained payable.

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Issues: (i) whether the demand could be sustained by invoking the extended period of limitation on the allegation of suppression or misdeclaration; (ii) whether deemed credit under the relevant notification could be denied; (iii) whether penalty was sustainable.

Issue (i): Whether the demand could be sustained by invoking the extended period of limitation on the allegation of suppression or misdeclaration.

Analysis: The price declarations were filed on the basis of cost data supplied by the merchant manufacturer. The record did not show any suppression or misdeclaration by the appellant, nor any evidence of collusion with the supplier. In the absence of material showing wilful conduct or mala fide intent, invocation of the extended period was not justified.

Conclusion: The extended period of limitation was not available to the Revenue, and the demand beyond the normal period was set aside in favour of the assessee.

Issue (ii): Whether deemed credit under the relevant notification could be denied.

Analysis: The denial of deemed credit was founded on the alleged incorrect value declaration of raw material supplied by the merchant manufacturer. Since the appellant was not shown to have furnished false particulars or acted in collusion, the incorrect value supplied by another party could not be fastened upon the appellant to deny the credit.

Conclusion: Denial of deemed credit was unsustainable and the credit was allowed in favour of the assessee.

Issue (iii): Whether penalty was sustainable.

Analysis: Penalty depended on proof of deliberate evasion or culpable conduct. As the appellant was not found to have suppressed facts or acted with mala fide intent, the basis for penalty failed.

Conclusion: Penalty was set aside in favour of the assessee.

Final Conclusion: The appeal succeeded to the extent that the extended-period demand, denial of deemed credit, and penalties were quashed, while the duty demand for the normal period remained payable.

Ratio Decidendi: Where the assessee files declarations on the basis of information supplied by another party and no evidence shows suppression, misdeclaration, or collusion, the extended period of limitation and consequential denial of credit or penalty cannot be sustained.

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