Extended limitation for duty demand upheld where exemption was wrongly availed and mandatory disclosure was not made.

Wrongful availing of an exemption without verifying the legal position can justify invocation of the extended period where the assessee failed to disclose its true duty liability and omitted the particulars required for the notifications. The record showed no timely application for a central excise licence and no basis to impose on the department a duty to inform the assessee of the change in law. Earlier payment of duty and the failure to furnish mandatory particulars were treated as significant, and the plea of absence of intent to evade duty was rejected. The extended period under the proviso to Section 11A(1) was held available, and the duty demand with penalty was upheld.

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Issues: Whether the demand of duty and penalty could be sustained by invoking the extended period on the ground that the assessee wrongly availed exemption and failed to take the steps required to ascertain and disclose its duty liability.

Analysis: The failure to pay duty was found to have arisen from the assessee's wrongful availing of an exemption to which it was not entitled. The record showed no effort to verify the legal position, no application for central excise licence at the relevant time, and no basis to hold that the department was bound to inform the assessee of the change in law. The earlier payment of duty and the non-furnishing of particulars required before availing the notifications were treated as significant circumstances. On those facts, the plea of absence of intention to evade duty was rejected, and the cited authorities were distinguished on their facts.

Conclusion: The extended period under the proviso to Section 11A(1) was available to the department, and the demand of duty together with penalty was upheld against the assessee.

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