Extended limitation and suppression of material facts can override approved classification lists in exemption disputes.

Approved classification lists do not bar invocation of the extended limitation period where exemption is claimed on the basis of suppressed or undisclosed material facts. The article explains that, after amendment of the exemption notification, eligibility depended on small scale unit registration, and failure to disclose DGTD registration status in the classification lists was treated as a material non-disclosure. Correspondence that did not clearly reveal that fact was insufficient. The Cotspun principle was considered inapplicable on these facts because suppression defeats reliance on prior approval.

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Issues: Whether the extended period of limitation could be invoked for the duty demand despite the clearances having been made under approved classification lists and whether the appellants had suppressed material facts while claiming exemption under the relevant notification.

Analysis: The demand related to the period after amendment of the exemption notification, when eligibility depended upon registration as a small scale unit. The appellants had not disclosed their DGTD registration status in the classification lists, and the correspondence relied upon did not amount to a clear disclosure of that fact. In these circumstances, the earlier approval of classification lists did not bar the Department from invoking the longer limitation period. The plea based on the decision in Cotspun was held inapplicable because that principle does not assist an assessee where material facts have been suppressed.

Conclusion: The extended period of limitation was validly invoked, and the challenge on limitation failed.

Final Conclusion: The demand and penalty were sustained and all three appeals were rejected.

Ratio Decidendi: Approved classification lists do not preclude the invocation of the extended limitation period where exemption is claimed by suppressing material facts or by failing to make required disclosures.

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