Extended limitation under central excise law fails where the department could have detected the true position at clearance despite misleading declarations.

Extended limitation under the proviso to Section 11A(1) of the Central Excise Act could not be invoked where the department, with reasonable diligence, could have verified the true position at the time of clearance. Although the goods were cleared on AR4A declarations describing them as sent under bond as deemed export, the declaration was misleading and there was no Central Excise exemption for goods said to be deemed exported. Even so, the department's delay in issuing notice after becoming aware of the facts defeated reliance on the extended period, so the demand could not be sustained on that basis.

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Issues: Whether the extended period of limitation under the proviso to sub-section (1) of Section 11A of the Central Excise Act, 1944 was available for recovery of duty on the ground of misdeclaration that the goods were intended for deemed export.

Analysis: The goods were cleared on AR4A declarations stating that they were being sent under bond as deemed export. The declaration was found to be misleading, and there was no provision in the Central Excise law for exemption on goods said to be deemed exported. However, the department itself had the means to ascertain the true position at the time of clearance and, after becoming aware of the facts, delayed issuance of notice for several years. On these facts, the department could not rely upon the extended period.

Conclusion: The extended period of limitation was not available, and the demand could not be sustained on that basis; the finding was against the Revenue.

Final Conclusion: The appeal failed and the order dropping the demand was left undisturbed.

Ratio Decidendi: Where the department could with reasonable diligence have detected the true position at the time of clearance, extended limitation cannot be invoked merely because the assessee made a misleading declaration.

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