Suppression of facts and extended limitation failed where disclosure and bona fide belief supported the assessee's case.

Duty demand and penalty could not be sustained where the department failed to establish suppression of facts with intent to evade duty. The assessee had disclosed the texturing activity, held a certificate from the jurisdictional Superintendent showing manufacture of exempted goods, and bought yarn from the local market at a price inclusive of excise duty, supporting a bona fide belief that duty had already been paid. On these facts, the extended limitation period was inapplicable, so the demand was time-barred and the penalty failed.

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Issues: Whether the demand of duty and penalty were sustainable when the extended period of limitation was invoked on the allegation of suppression of facts.

Analysis: The appellant had informed the department about the texturing activity and held a certificate issued by the jurisdictional Superintendent showing that it was engaged in the manufacture of exempted goods. The yarn was purchased in the local market at a price inclusive of excise duty, supporting the appellant's bona fide belief that duty had been paid. On these facts, suppression with intent to evade duty was not established, and the extended period could not be applied.

Conclusion: The demand was barred by limitation and the penalty could not be sustained; the finding was in favour of the assessee.

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