Prior departmental intimation and approved ground plan barred extended limitation, defeating the duty demand and penalty.

Prior intimation to the department and approval of the ground plan for erection of a steel tank defeated the allegation of clandestine construction. On that factual basis, the extended period of limitation under the proviso to Section 11A and the corresponding rule provision was unavailable, so the duty demand and penalty could not be sustained. The demand and penalty were therefore set aside without examination of the merits.

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Issues: Whether the duty demand and penalty were barred by limitation in view of the prior intimation to the department and approval of the ground plan for erection of the steel tank.

Analysis: The appellants had informed the department about the proposed construction of the steel tank and had obtained approval of the ground plan and permission for storage of molasses. In such circumstances, the construction and erection of the tank could not be treated as clandestine. The basis for invoking the extended period under the proviso to Section 11A and the corresponding rule provision was therefore absent, and the demand was hit by limitation.

Conclusion: The duty demand and penalty could not be sustained on limitation, and the extended period was not invocable.

Final Conclusion: The appeal succeeded on the ground of limitation, and both the duty demand and the penalty were set aside without examination of the merits.

Ratio Decidendi: Where the assessee had given prior intimation to the department and obtained approval for the disputed activity, the allegation of clandestine removal fails and the extended period of limitation cannot be invoked.

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