Extended limitation requires proof of intent to evade duty; without it, the demand and penalty fail.

Invocation of the extended limitation period under excise law requires proof that suppression or misdeclaration was made with intent to evade duty. Where the department fails to establish that deliberate intent, the demand is time-barred and the accompanying penalty cannot survive. In this CESTAT Chennai matter, the Tribunal held that the lower authority had not complied with the earlier remand directions or produced convincing material to prove suppression with the requisite intent, so the longer limitation period was unavailable and the penalty under Rule 173Q could not be sustained.

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Issues: Whether the extended period of limitation could be invoked and penalty sustained when the department failed to establish suppression with intent to evade duty.

Analysis: The appeal arose from a second-round adjudication in which the earlier remand had required reconsideration in the light of binding Board circulars and a clear finding on suppression. The Tribunal found that the lower authority had disregarded those directions and had not placed any convincing material to show that the appellant had made a deliberate misdeclaration or suppressed facts with the requisite intent to evade duty. It held that mere suppression, without proof of intent to evade duty, is insufficient to justify the longer limitation period, and that the enhancement of penalty under Rule 173Q could not stand once the foundational allegation itself failed.

Conclusion: The extended period of limitation was not available to the Revenue, and the penalty could not be sustained; the finding was in favour of the assessee.

Final Conclusion: The impugned order was set aside on limitation, and the appeals were allowed.

Ratio Decidendi: Invocation of the extended period requires proof of suppression with intent to evade duty, and where such intent is not established, the demand is time-barred and allied penalty cannot survive.

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