Where there is a misstatement of facts by the assessee with intent to evade payment of duty, the extended limitation period of five years under the proviso to Section 11A of the Central Excises and Salt Act, 1944 applies.

The petitioner has filed this writ petition challenging the correctness and validity of the order dated 31-1-1989 passed by the second respondent in the petition. The petitioner is engaged in the manufacture of a product marketed in the brand name "Janatha Cem". According to the petitioner, it is a kind of cement obtained by heating limestone and charcoal in a kiln. As per the affidavit of the petitioner, the product was being cleared as Sagol under Tariff Item No. 23 of the First Schedule of the Central Excises and Salt Act, 1944 as it stood till it was replaced by the Central Excise Tariff Act, 1985. The petitioner has also availed of exemption from excise duty under Notification No. 5/1970 dated 31-1-1970. The Notification exempted

"cement commonly known as Sagol and obtained by heating limestone and burnt coal in a kiln"

from the whole of duty of excise leviable thereon. In 1976, sample of the petitioner's product was drawn by the Superintendent of Central Excise, Rajapalyam and the petitioner was informed that the sample is calcium hydroxide in powder form and it is not cement based water paint. In 1981, the petitioner was called upon to submit his profit and loss account from the year 1974 to 1980 to the Superintendent of Central Excise, Rajapalyam. On 30-4-1982 the petitioner wrote to the Superintendent of Central Excise that the production was eligible for exemption under Notification No. 5/70 and it was not to be classified under Tariff Item No. 68. The petitioner furnished details of investment like machinery, building etc., in August 1982. In September 1982, the petitioner was called upon to furnish a certified copy of the total sales of its products for the year 1981-82 duly certified by the auditor of the company so as to enable the department to determine the duty liability of its product under Tariff Item No. 68. The petitioner sent a reply that the product would fall under Tariff Item No. 23 and not under Tariff Item No. 68 and it was entitled to exemption as stated already. In October 1982, samples were drawn by the department to find out whether it was Sagol cement and eligible for exemption under the aforesaid notification. Further details were called for and they were also furnished. It is stated that no communication was sent to the petitioner thereafter till 1984. In 1984 the petitioner wrote to the Superintendent of Central Excise as to the classification of the product as tested by the Department. The Department called for further details and they were also furnished by the petitioner. Further samples were drawn in November 1984 to determine the classification.

2.On 22-11-1984 a show cause notice was issued to the petitioner on the basis that the product would fall under Tariff Item No. 68 and he was called upon to show cause why duty should not be levied from November 1979 to October 1984. The provisions of Section 11A of the Central Excises and Salt Act was also invoked in that notice. In paragraph 15 of the notice it was stated that the petitioner deliberately misdeclared the goods as "wall painting cement" and misrepresented to the department that it was sagol exempted under Notification No. 5/70 dated 31-1-1970. A reply was sent by the petitioner in December 1984. A second show cause notice was issued on 20-4-1985 for the period 1-1-1984 to 31-3-1985. It was stated in paragraph 15 thereof that the petitioner had misdeclared the goods and made misrepresentations to the department as to the classification of the product. Again the petitioner sent a reply denying the statements contained in the show cause notice.

3. An order was passed by the Assistant Collector of Central Excise on 26-7-1985 holding that the petitioner was guilty of misrepresentation and misdeclaration and classifying the product as one falling under Tariff Item No. 68. The order directed the petitioner to pay a duty of Rs. 6, 93, 814.56 for the period 1979-80 to 1984-85. Another order was passed on 19-8-1985 by the Assista