Suppression of material facts justified extended limitation, while penalty was reduced despite the confirmed duty demand.

Goods exported under bond remained liable to central excise duty and were not covered by the exemption for clearances on which duty was not payable for any reason. Non-inclusion of such clearances in RT 12 returns, coupled with the absence of support for a bona fide belief, amounted to suppression of material facts and justified invocation of the extended period of limitation, so the duty demand was upheld. Although suppression was established, the facts did not justify a penalty at the full equivalent amount, and the penalty was reduced on the view that a lesser amount met the ends of justice.

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Issues: (i) whether the extended period of limitation was invocable for the duty demand; (ii) whether the penalty was liable to be sustained in full.

Issue (i): whether the extended period of limitation was invocable for the duty demand.

Analysis: The exemption notification excluded only clearances on which excise duty was not payable for any reason. Goods exported under bond remained liable to central excise duty and did not fall within that exclusion. The value of goods exported to Nepal was not included in the RT 12 returns, and the record did not support the claimed bona fide belief. The non-disclosure of the relevant clearances amounted to suppression of material facts.

Conclusion: The extended period of limitation was correctly invoked, and the duty demand was upheld.

Issue (ii): whether the penalty was liable to be sustained in full.

Analysis: Although suppression justified invoking the extended period, the facts did not warrant imposition of penalty at the full equivalent amount. A reduced penalty met the ends of justice.

Conclusion: The equal penalty was not sustainable, and the penalty was reduced to Rs. 1 lakh.

Final Conclusion: The duty demand stood confirmed, while the penalty was substantially reduced, leaving the appeal only partly successful for the assessee.

Ratio Decidendi: Where goods exported under bond remain duty-liable, their non-inclusion in clearance figures cannot be justified on a claim of bona fide belief, and suppression of such material facts permits invocation of the extended limitation period.

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