Extended limitation requires proof of suppression with intent to evade duty; penalties fail when that basis is not established.

The extended limitation period cannot be invoked without material showing suppression of facts with intent to evade duty; where the factory premises were under the control of the proper central excise officer and the ground plan had been approved, non-disclosure of the earlier manufacturer, by itself, was insufficient to establish deliberate withholding. The demand was therefore confined to the normal period. As the allegation of suppression failed, the penalties imposed on the assessee and its managing partner, which rested on the same basis, were not sustainable and were set aside.

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Issues: Whether the extended period of limitation could be invoked on the facts of the case and whether the penalties imposed on the assessee and its managing partner were sustainable.

Analysis: The factory premises had been under the control and jurisdiction of the proper central excise officer, who had approved the ground plan and was expected to have verified the relevant particulars before granting approval. On those facts, non-disclosure of the earlier manufacturer could not, by itself, establish suppression with intent to evade duty. The factual matrix did not justify a finding of deliberate withholding of information, and the demand was therefore not sustainable beyond the normal period. Since the invocation of the extended period failed, the penalties founded on the same allegation also could not survive.

Conclusion: The invocation of the extended period was held to be unsustainable, and the penalties imposed on the assessee and its managing partner were set aside.

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