Exempted goods count toward clearance limits, but extended limitation requires clear allegations of suppression or misstatement.

Exempted goods are included in the computation of clearance value where an exemption notification measures eligibility by reference to excisable goods, so the amended scheme treated all excisable goods as relevant and the exemption-related demand was sustained on merits. However, extended limitation cannot be applied unless the show cause notice expressly alleges suppression or misstatement and the record supports deliberate withholding of information; absent such clear allegations, the demand is confined to the normal six-month period and the larger part of the demand is time-barred.

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Issues: (i) Whether exempted goods were to be included as excisable goods for computing the value of clearances under the relevant exemption notification. (ii) Whether the demand could be extended beyond six months in the absence of a clear allegation of suppression or misstatement.

Issue (i): Whether exempted goods were to be included as excisable goods for computing the value of clearances under the relevant exemption notification.

Analysis: The value limit under the exemption scheme was required to be computed on the basis of excisable goods. The settled position accepted by both sides was that goods exempted from duty also answer the description of excisable goods for this purpose. The amendment to the exemption notification made the value of all excisable goods relevant for determining eligibility.

Conclusion: This issue was decided against the assessee.

Issue (ii): Whether the demand could be extended beyond six months in the absence of a clear allegation of suppression or misstatement.

Analysis: The show cause notice did not contain a clear and unambiguous of suppression or misstatement. Such allegations cannot be inferred by implication and must be expressly made. No material showed any deliberate withholding of information by the assessee, and the extended period could not therefore be applied.

Conclusion: This issue was decided in favour of the assessee, and the demand was confined to the normal limitation period of six months.

Final Conclusion: The exemption-related demand was sustained on merits, but the larger portion of the demand was time-barred, so the assessee obtained only partial relief.

Ratio Decidendi: Exempted goods are included in the computation of value where the exemption notification uses excisable goods as the measure, but the extended limitation period can be invoked only on a clear allegation and proof of suppression or deliberate withholding of information.

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