Extended limitation requires wilful suppression; a bona fide duty dispute and disclosed conduct defeated the excise demand.

The extended period of limitation under excise law cannot be invoked absent material showing wilful suppression of facts with intent to evade duty. The demand on cigarette samples drawn for quality testing arose from a long-standing bona fide dispute, with earlier conflicting rulings, disclosure by the assessee of its stand, subsequent voluntary payment for the later period, and revised record-keeping. The notice was also based on theoretical estimation rather than undisclosed private records, and the department did not act promptly after the Supreme Court settled the issue. On these facts, the show cause notice was held time-barred and the demand unsustainable, with the appeal succeeding for the assessee.

---

---

Issues: Whether the show cause notice demanding duty on cigarettes samples drawn for quality testing for the period September 1999 to November 2002 was barred by limitation and whether invocation of the extended period under the proviso to Section 11A was justified.

Analysis: The issue of duty liability on the samples had been under dispute for a long period and had earlier been the subject of conflicting decisions. The assessee had informed the department of its position after the favourable Tribunal ruling and had stopped payment of duty on that basis. After the Supreme Court finally decided the issue against the assessee, duty for the later period was voluntarily estimated and paid, and revised record-keeping was introduced. The demand in the impugned notice was based on theoretical estimation and not on any private records unearthed by the department. The records did not establish wilful suppression of facts with intent to evade duty. The department also did not act promptly after the Supreme Court decision, and the assessee had kept the department informed of its stand and actions.

Conclusion: The extended period under Section 11A was not invocable, the demand was unsustainable, and the appeal succeeded in favour of the assessee.

Ratio Decidendi: Where the assessee has disclosed its conduct, the issue is under bona fide dispute, and there is no material showing wilful suppression with intent to evade duty, the extended period of limitation under the excise law cannot be invoked.

---