Suppression of material facts justified extended limitation for exemption dispute, while penalty was reduced as excessive.

Non-disclosure of a material fact affecting exemption eligibility was treated as suppression, allowing invocation of the extended limitation period where the assessee continued to claim exemption after amendment and had not disclosed DGTD registration; ignorance of the notification was rejected because publication in the Official Gazette was sufficient notice. The existence of a parallel notice for the normal period did not prevent recourse to the longer period once suppression was established, so the duty demand was upheld as not time-barred. The penalty under the excise rules was found excessive on the facts and was reduced, granting only partial relief.

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Issues: (i) Whether the extended period of limitation was invokable on the ground of suppression of material facts in relation to eligibility for exemption under the notification; (ii) Whether the penalty imposed under the excise rules required reduction.

Issue (i): Whether the extended period of limitation was invokable on the ground of suppression of material facts in relation to eligibility for exemption under the notification.

Analysis: The appellants continued to avail the benefit of the exemption notification after its amendment disentitling units registered with DGTD, while the fact of such registration had not been disclosed to the Department. The explanation that the amendment was not known to the appellants was rejected, since ignorance of a notification was held to be no excuse and the notification had been published in the Official Gazette. The precedents relied upon by the appellants were distinguished on facts, and the existence of parallel proceedings for a normal period did not curtail the Department's right to invoke the longer period where suppression was established.

Conclusion: The extended period of limitation was rightly invoked and the demand was not time-barred.

Issue (ii): Whether the penalty imposed under the excise rules required reduction.

Analysis: Although the duty demand was sustained, the penalty was considered excessive in the circumstances of the case. The quantum of duty and the attendant facts justified moderation of the penal amount.

Conclusion: The penalty was reduced.

Final Conclusion: The duty demand was upheld, but the penalty was substantially reduced, resulting in only partial relief to the appellants.

Ratio Decidendi: Non-disclosure of a material fact affecting exemption eligibility constitutes suppression for the purposes of invoking the extended limitation period, and the existence of a normal-period notice in parallel proceedings does not bar recourse to the longer period where statutory conditions are otherwise met.

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