Extended limitation under central excise fails where scrap use was disclosed and no suppression or intent to evade was shown.

The extended limitation period under the proviso to Section 11A of the Central Excise Act, 1944 was unavailable because suppression of facts, fraud, collusion or wilful misstatement with intent to evade duty was not shown. The assessee had disclosed the use of melting scrap in returns, classification lists, correspondence and other records, and the department already knew the material facts. Mere reference to exemption notifications in the classification lists did not establish a deliberate attempt to mislead. The demand was therefore held time-barred, and the consequential duty demand and penalty were set aside.

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Issues: Whether the demand of duty and penalty were barred by limitation in view of the alleged suppression of facts and whether the extended period under the proviso to Section 11A of the Central Excise Act, 1944 could be invoked.

Analysis: The show cause notice was issued beyond the normal period of six months. The extended period could be sustained only if there was suppression of facts, fraud, collusion or wilful misstatement with intent to evade duty. The record showed that the assessee had disclosed the use of melting scrap in its returns, classification lists, correspondence with the jurisdictional officers and connected records, and the department had knowledge of the material facts. The only basis for invoking limitation was the mention of two exemption notifications in the classification lists, but that did not establish suppression or any deliberate attempt to mislead when the department was already aware of the use of scrap as input.

Conclusion: The extended period was not available to the Revenue and the demand was time-barred. The duty demand and consequential penalty were set aside.

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