Excise demand barred by limitation where notice came after four years and no legal basis supported confirmation.

Excise demand was held unsustainable because the Department already knew the relevant facts, yet issued the show cause notice after about four years, so the demand was barred by limitation under Section 11A of the Central Excise Act, 1944. The confirmation also failed because it relied only on an alleged assurance by the assessee to pay duty if buyers for the machinery were not found by a stated date, and such an assurance could not replace legal authority for raising or confirming a duty demand. The assessee therefore succeeded on both limitation and absence of a valid legal basis for the demand.

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Issues: Whether the excise demand could be sustained when the show cause notice was issued after about four years and the demand was confirmed only on the basis of an assurance given by the assessee to pay duty if buyers for the machinery were not found.

Analysis: The Department had knowledge of the relevant facts, yet the show cause notice was issued after a lapse of four years. The demand was therefore hit by limitation under Section 11A of the Central Excise Act, 1944. The impugned confirmation also rested only on an alleged assurance by the assessee to remit duty if buyers were not found by a stated date, but such assurance could not substitute legal authority for confirmation of duty demand.

Conclusion: The demand was not sustainable and the assessee succeeded on limitation as well as on the absence of any legal basis for confirmation of the demand.

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