Extended limitation unavailable against job workers absent knowledge of undervaluation; excise demand time-barred and penalty unsustainable.

Differential central excise duty demand against job workers was treated as time-barred because there was no evidence that they knew of, or ated in, the undervaluation allegedly adopted by the merchant-manufacturers. The processing units had paid duty on the assessable value declared in the invoices, had no independent means to verify a lower value, and filed their price declarations on that basis. On these facts, the extended limitation period was unavailable, so the demand was barred by limitation. As the demand failed on limitation, the penalty could not survive.

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Issues: Whether the demand of differential central excise duty raised against the job workers was barred by limitation in the absence of evidence of knowledge or involvement in the undervaluation adopted by the merchant-manufacturers, and whether penalty was sustainable.

Analysis: The processing units paid duty on the assessable value declared in the invoices of the merchant-manufacturers and there was no material showing that they knew of any lower value being shown by the traders. In such circumstances, the basis for invoking the extended period was absent. The order also noted that the assessee had no independent means to verify the correct value and had adopted the declared invoice value while filing the price declaration and paying duty. Following the cited Tribunal view that, on similar facts, the extended period was not available against job workers for alleged wrong declaration of value, the demand was treated as time-barred.

Conclusion: The demand was held to be barred by limitation and the penalty could not survive.

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