Extended limitation upheld for unaccounted clearances, but penalty set aside because the amended offences regime was not retrospective.

Extended limitation was upheld because the classification lists did not disclose any claim to single-processing exemption, no material established the nature or number of processes undertaken, and the record showed unaccounted clearances supported by private records and contemporaneous charts. The exemption plea failed on the evidence, and the concealment of removals justified invocation of the extended period. Penalty, however, could not be sustained for a period predating the amendment introducing the offences-and-penalties framework, as the amended provision was held inapplicable retrospectively. Duty demand and clandestine removal findings were sustained, but the penalty was set aside.

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Issues: (i) Whether the demand of additional excise duty was barred by limitation and whether the assessee was entitled to exemption on the plea of single processing. (ii) Whether penalty could be imposed for the period in question under the amended provisions governing offences and penalties.

Issue (i): Whether the demand of additional excise duty was barred by limitation and whether the assessee was entitled to exemption on the plea of single processing.

Analysis: The classification lists did not mention any claim based on single processing, nor did they refer to the exemption notifications relied on by the assessee. No material was shown to establish how many processes were undertaken or what process was carried out on job-work basis. The record showed clearances of fully processed fabrics without accountal and without cover of Central Excise documents, and the unaccounted removals were supported by the private records and contemporaneous charts. In that background, the plea of exemption was unsupported, and the concealment of clearances justified invocation of the extended period.

Conclusion: The demand was not time-barred and the plea of single processing exemption was rejected.

Issue (ii): Whether penalty could be imposed for the period in question under the amended provisions governing offences and penalties.

Analysis: The penalty was imposed in relation to liability arising before the amendment that introduced the offences and penalties framework into the relevant provision governing additional duties. The amended provision was held inapplicable to the period involved, and the same principle applied to the present case. Accordingly, though the duty demand and the finding of contravention were sustained, the legal basis for penalty was absent for the relevant period.

Conclusion: The penalty was unsustainable and was set aside.

Final Conclusion: The duty demand and the finding of clandestine removals were upheld, but the penalty was deleted, resulting in only a partial success for the appellant.

Ratio Decidendi: A penalty under an amended offences-and-penalties provision cannot be imposed retrospectively for a period prior to the amendment, even where the underlying duty demand and violation are otherwise sustained.

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