Full disclosure defeats extended limitation and regular clearances exclude Rule 9(2) in excise duty disputes.

Full disclosure of the raw material, manufacturing process, by-products, and classification details barred invocation of the extended limitation period under the proviso to Section 11A, because the department could not show suppression, misdeclaration, or intent to evade duty. Approved classification lists and compliance with prescribed excise procedures also made Rule 9(2) inapplicable, as the clearances were regular and not clandestine. On that basis, the duty demand and penalty were not sustainable, and consequential relief followed.

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Issues: (i) Whether the demand was barred by limitation and the extended period under the proviso to Section 11A could be invoked on the facts disclosed; (ii) whether Rule 9(2) could be invoked when the goods were cleared under approved classification lists and prescribed procedures.

Issue (i): Whether the demand was barred by limitation and the extended period under the proviso to Section 11A could be invoked on the facts disclosed.

Analysis: The appellants had disclosed the imported raw material, the manufacturing process, and the emergence of by-products in their correspondence and declarations. The classification lists were filed and approved, departmental queries were answered, and the department had earlier proceeded on the same facts in a prior show cause notice. In these circumstances, the department could not establish suppression of facts, misdeclaration, or intent to evade duty so as to justify the extended period.

Conclusion: The demand was time-barred and the invocation of the extended period was not sustainable, in favour of the assessee.

Issue (ii): Whether Rule 9(2) could be invoked when the goods were cleared under approved classification lists and prescribed procedures.

Analysis: Rule 9(2) is attracted to cases of removal otherwise than in accordance with the prescribed procedure. Here, the goods were cleared under approved classification lists and the procedural requirements under the excise law were complied with. The facts disclosed no clandestine removal or bypass of the regular assessment and clearance mechanism.

Conclusion: Rule 9(2) was inapplicable, in favour of the assessee.

Final Conclusion: The duty demand and penalty could not be sustained, and the appeal succeeded with consequential relief according to law.

Ratio Decidendi: Where the assessee has made full disclosure, filed approved classification lists, and the department was already aware of the material facts, a later notice on the same issue cannot validly invoke the extended period absent suppression or intent to evade duty; Rule 9(2) cannot be applied to regular clearances made under the approved procedure.

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