Extended limitation and excise penalties upheld where suppression was alleged clearly and inadmissible credit was reversed before notice.

A show cause notice invoking the extended limitation period was treated as valid where it clearly alleged suppression or misrepresentation, even without any fixed formula or prescribed wording, and the detected short receipt of inputs supported that inference. Reversal of inadmissible credit before the notice did not by itself bar penalties or interest where the credit had been wrongly availed, duty evasion on cleared goods followed, and the record did not show non-utilisation of the credit. On that basis, the demand, interest, and penalties under the cited excise provisions were upheld.

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Issues: (i) whether the show cause notice and demand invoking the extended period under section 11A were sustainable on the basis of suppression or misrepresentation; (ii) whether penalties and interest under sections 11AC and 11AB and penalty under rule 173Q were justified despite reversal of inadmissible credit before issuance of the show cause notice.

Issue (i): whether the show cause notice and demand invoking the extended period under section 11A were sustainable on the basis of suppression or misrepresentation.

Analysis: The inadmissible credit was not disputed. The notice itself stated that facts were suppressed or misrepresented and referred to recovery under rule 57-I and section 11A of the Central Excise Act, 1944. That was treated as sufficient notice for invoking the larger period. The absence of any prescribed formula or particular wording in the notice did not defeat the invocation of the extended period, and the detected short receipt of inputs supported the finding of suppression.

Conclusion: The extended period under section 11A was validly invoked, and the demand was sustainable.

Issue (ii): whether penalties and interest under sections 11AC and 11AB and penalty under rule 173Q were justified despite reversal of inadmissible credit before issuance of the show cause notice.

Analysis: Wrong availment of credit was held to result in consequential evasion of duty on the cleared goods, and the record did not show that the credit was not utilised. The cited decisions relied on by the appellant were distinguished. On rule 173Q, reversal of credit before the notice did not preclude penalty. The decision relied on binding higher authority holding penalty under rule 173Q to be mandatory and also on the principle that mens rea was not required.

Conclusion: Sections 11AC and 11AB and rule 173Q were correctly applied, and the penalties were justified.

Final Conclusion: The appeal failed in its entirety, and the impugned order confirming the demand and penalties was upheld.

Ratio Decidendi: A show cause notice need not use any fixed formula to invoke the extended period if it clearly alleges suppression or misrepresentation, and reversal of inadmissible credit before notice does not by itself bar statutory penalties where the credit was wrongly availed and duty evasion followed.

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