Disclosure of material facts defeats extended limitation; a legal view on excisability is not suppression or misstatement.

Where the assessee had disclosed in the classification lists that it was purifying chemicals and had only taken a legal view that the purified products were not excisable, those disclosures could not be treated as suppression of facts or misstatement. Since the department was aware of the material facts and took no timely action, the extended period under the proviso to section 11A(1) of the Central Excise Act, 1944 was not available, and the duty demand was time-barred.

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Issues: Whether the demand of duty on purified chemicals was barred by limitation and whether the extended period under the proviso to section 11A(1) of the Central Excise Act, 1944 could be invoked on the ground of suppression or misstatement.

Analysis: The assessee had disclosed in the classification lists that it purified chemicals and had taken the stand that the purified products were not excisable. The department was aware of these facts and took no timely action. A mere expression of opinion by the assessee on excisability, even if later found incorrect, did not amount to suppression of facts or misstatement. The basis for invoking the extended period was therefore unsustainable.

Conclusion: The extended period of limitation was not available, and the demand was time-barred.

Ratio Decidendi: Where the assessee has disclosed the material facts to the department and only asserts a legal view on excisability, the disclosure cannot be treated as suppression of facts or misstatement so as to invoke the extended period of limitation.

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