Strict compliance with exemption markings on excisable goods, with suppression justifying extended limitation and penalty.

Exemption under Notification No. 188/86-C.E. depended on each tube bearing a durable and prominent "ADV" marking, and package marking alone was insufficient; the exemption was therefore unavailable. Because the assessee had declared compliance in the classification list while continuing clearances without the required marking, the record supported suppression of facts and wilful misstatement. On that basis, the extended limitation period was correctly invoked, and the penalty under Rule 173Q(1) was sustainable. The duty demand for the extended period and the penalty were upheld.

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Issues: (i) Whether the exemption under Notification No. 188/86-C.E. was available when the required durable and prominent marking of "ADV" was not made on each tube. (ii) Whether the extended period of limitation under the proviso to Section 11A(1) was invocable and the penalty under Rule 173Q(1) sustainable.

Issue (i): Whether the exemption under Notification No. 188/86-C.E. was available when the required durable and prominent marking of "ADV" was not made on each tube.

Analysis: The notification granted exemption only if every tube bore a durable and prominent marking of the letters "ADV". The classification lists themselves declared compliance with that condition. The evidence showed that the goods cleared bore markings only on the package, not on the tubes, and the assessee's own reply indicated that the mould engravings were not properly made and had worn out. The alleged package marking did not amount to compliance with the notification condition.

Conclusion: The exemption was not available to the assessee.

Issue (ii): Whether the extended period of limitation under the proviso to Section 11A(1) was invocable and the penalty under Rule 173Q(1) sustainable.

Analysis: The assessee had declared in the classification list that the tubes would bear "ADV" markings, yet continued clearances without such markings. The record supported a finding that the assessee knew the marking condition was not being satisfied and still availed the exemption. This amounted to suppression of facts and wilful misstatement, justifying the extended period. The same conduct also warranted penalty, and the penalty imposed was maintained.

Conclusion: The extended period was correctly invoked and the penalty under Rule 173Q(1) was sustainable.

Final Conclusion: The order confirming duty demand for the extended period and sustaining penalty was upheld, and the appeal failed.

Ratio Decidendi: Where an exemption notification requires a specific durable and prominent marking on each excisable article, the condition must be strictly fulfilled; failure to do so, coupled with declaration of compliance and continued clearances, amounts to suppression or wilful misstatement justifying invocation of the extended limitation period and penalty.

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