Suppression should be wilful :
Supreme Court in Rainbow Industries v. CCE – 1994 (74) ELT 3 (SC) = 1994 (6) SCC 563 = AIR 1994 SC 2783 = 1994 AIR SCW 4465 have held that in order for the extended period to apply, two ingredients must be present – wilful suppression, mis-declaration etc., and the intention to evade duty – followed in ONGC v. CCE – 1995 (79) ELT 117 (CEGAT). Same view in Tamil Nadu Housing Board v. CCE – 1995 Suppl (1) SCC 50 = 74 ELT 9 (SC). In this case, it was held that the powers to extend period from one year to 5 years are exceptional powers and hence have to be construed strictly.
Intention to evade payment of duty is not mere failure to pay duty. It must be something more, i.e. that assessee must be aware that duty was leviable and he must deliberately avoid payment of duty. ‘Evade’ means defeating the provision of law of paying duty. It is made more stringent by the use of word ‘intent’. In other words, the assessee must deliberately avoid payment of duty payable under the law. Where there was scope of doubt whether duty was payable or not, it is not ‘intention to evade duty’. – Tamilnadu Housing Board v. CCE 1995 Supp(1) SCC 50 = 1994 (74) ELT 9 (SC) = 55 ECR 7. In this case, it was held that the powers to extend period from one year to 5 years are exceptional powers and hence have to be construed strictly.