Extended limitation under Section 11A needs suppression; disclosed facts requiring enquiry defeated the demand and penalty.

The extended period of limitation under Section 11A is attracted only where duty has escaped assessment because of fraud, collusion, wilful misstatement, suppression of facts, or similar culpable conduct. On the facts discussed, the assessee had disclosed in the classification list that the product contained additives such as fruit pulp, which was sufficient to put the Department on notice and require further enquiry. The Department's failure to investigate further could not be treated as suppression by the assessee, and the assessee's bona fide belief that the product was exempt remained relevant. The demand and penalty were therefore not sustainable on the basis of the extended period.

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Issues: Whether the demand and penalty were sustainable by invoking the extended period of limitation on the ground of suppression of facts and misdeclaration.

Analysis: The classification dispute had already been settled, leaving only the question whether the proviso to Section 11A could be invoked for the demand and whether the penalty could stand. The assessee had filed a classification list disclosing that the product contained additives such as fruit pulp, and the Tribunal had earlier found that this disclosure gave the Department sufficient notice to make further enquiry before allowing exemption. The governing principle is that the extended period is attracted only where duty has escaped assessment because of fraud, collusion, wilful misstatement, suppression of facts, or similar culpable conduct. On the earlier finding in the assessee's own case, the Department's failure to investigate further could not be treated as suppression by the assessee, and the assessee's bona fide belief that the product was exempt remained relevant against invocation of the extended period.

Conclusion: The invocation of the extended period under Section 11A was not sustainable, and the demand and penalty could not be upheld.

Ratio Decidendi: Where the assessee has made a disclosure sufficient to put the Department on notice, the Department's failure to make further enquiry cannot be treated as suppression of facts so as to invoke the extended period of limitation under Section 11A.

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