Extended-period duty demand turns on gate pass disclosure and departmental notice, with partial remand for quantification.

Extended-period duty demand under Rule 57-I was not sustainable for consignments where the supplier's gate passes clearly endorsed the set-off under Notification No. 432/86-C.E., because that endorsement put the department on notice that part of the duty was not available as credit. For consignments from other suppliers, the gate passes did not clearly establish comparable departmental knowledge, so the limitation objection could not be accepted on the same basis. The demand therefore survived only in part, and the admissible duty amount had to be reworked on remand with supporting details.

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Issues: Whether the demand of duty, raised by invoking the extended period under the proviso to sub-rule (1) of Rule 57-I of the Central Excise Rules, 1944, was barred by limitation in respect of the consignments covered by the supplier's gate passes, and whether the matter required remand for quantification of the admissible duty amount.

Analysis: The duty demand was founded on the allegation that credit had been wrongly taken on beta naphthol to the extent duty had been paid out of the set-off amount linked to Notification No. 432/86-C.E. The gate passes of one supplier clearly carried an endorsement showing the set-off under the notification, which put the department on notice that part of the duty was not available as credit. On that basis, the extended period could not be sustained for those consignments. However, the same conclusion could not be reached for the other suppliers, since their gate passes did not clearly establish that the department had sufficient knowledge of the manner in which duty had been paid. The demand therefore survived only in part, and the exact deductible amount had to be worked out.

Conclusion: The demand was barred by limitation only in respect of the consignments supplied by Multi Organics Pvt. Ltd., and the matter was remanded to the Commissioner for quantification of the duty figure with supporting details.

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