Extended limitation cannot be invoked against a job worker absent evidence of participation in under-valuation; penalty also fails.

Where a job worker is not shown to have participated in or had knowledge of a trader's under-valuation, the extended period of limitation cannot be invoked against the job worker, and the demand is time-barred. On the same factual basis, the penalty cannot survive because there is no allegation or evidence of the job worker's role in the under-valuation. The CESTAT, Ahmedabad applied this principle to similar facts and held that the longer limitation period was unjustified, so the demand and penalty failed.

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Issues: Whether the demand could be sustained by invoking the extended period of limitation and whether the penalty could survive.

Analysis: The duty liability on the correct value of grey fabrics was not disputed as a principle, but the record did not show that the appellant had any role in the alleged under-valuation declared by the trader. In the absence of allegation or evidence of the appellant's involvement, the invocation of the longer limitation period was not justified. Following the earlier Tribunal view applied to similar facts, the demand based on extended limitation could not be upheld.

Conclusion: The demand was barred by limitation and the penalty was not sustainable.

Ratio Decidendi: Where a job worker is not shown to have participated in or knowledge of the trader's under-valuation, the extended period of limitation cannot be invoked against the job worker and the penalty cannot stand.

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