Extended limitation under Section 11A fails where job workers lack collusion, knowledge of falsity, and intent to evade duty.

Extended limitation under the proviso to Section 11A could not be invoked against job-work processors who relied on the supplier's declaration, because there was no proved collusion, knowledge of falsity, or intent to evade duty. The record showed that the processors had declared value or composition on the basis of information supplied by the grey-fabric supplier, and the authorities found no material establishing that they knew the declarations were false. In the absence of these ingredients, the demand was time-barred and the penalty could not be sustained.

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Issues: Whether the extended period of limitation under the proviso to Section 11A could be invoked against job-work processors who declared the value or composition of goods on the basis of information supplied by the grey-fabric supplier, and whether the demand and penalty could survive in the absence of collusion or intent to evade duty.

Analysis: The notices alleged that the processors had accepted false or fake bills and had evaded duty with collusion, but the orders recorded no finding of knowledge of falsity on the part of the processors and no finding of collusion with the suppliers. The adjudicating authority's own conclusion was that the processors lacked intent to evade duty, and the Department did not challenge that conclusion. Once absence of intent to evade duty was found, the ingredients necessary for invoking the extended period were not established. On the connected appeal involving classification and composition of fabric, the notice also rested on alleged misdeclaration, but there was nothing to show that the processor knew the declaration was wrong or had colluded in it.

Conclusion: The extended period of limitation was not available to the Department, and the demands were barred by limitation. The appeals succeeded and the impugned orders were set aside.

Ratio Decidendi: Where a job worker acts on the supplier's declaration and there is no proved collusion, knowledge of falsity, or intent to evade duty, the proviso to Section 11A cannot be invoked to sustain a time-barred demand.

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