Suppression of facts not proved, so extended limitation and penalty failed in a job-work excise demand.

The extended period of limitation under Section 11A of the Central Excise Act could not be invoked because suppression of facts was not proved. The demand concerned plastic jerry cans manufactured on job work under challans issued under Notification No. 214/86-Central Excise, and the Department had already been aware through audit that the goods were meant for use by the principal manufacturer in exempted products. The job worker was not shown to have made any positive misstatement or concealed material facts with intent to evade duty, so the demand beyond the normal period was time-barred. As the limitation basis failed, penalty under Section 11AC also did not survive on the same footing.

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Issues: Whether the extended period of limitation under Section 11A of the Central Excise Act, 1944 could be invoked on the allegation of suppression of facts, and whether penalty was sustainable in the absence of such suppression.

Analysis: The demand arose from plastic jerry cans manufactured on job work basis under challans issued under Notification No. 214/86-Central Excise. The Department had earlier been aware through audit proceedings that the goods were meant for use by the principal manufacturer in relation to exempted products. The respondent, being only a job worker, was not shown to have made any positive misstatement or concealed material facts with intent to evade duty. In the absence of a specific allegation and proof of suppression, the conditions for invoking the extended period were not satisfied. Once the demand beyond the normal period was held time-barred, the basis for penalty under Section 11AC also did not survive on the same footing.

Conclusion: The extended period of limitation was not available to the Revenue, and the finding granting limitation benefit to the assessee was upheld. The Revenue's appeal was rejected.

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