Absence of mala fides defeats extended excise demand under Rule 9(2) for earlier clearances.

A demand of central excise duty for clearances made before April 1976 could not be sustained under Rule 9(2) where the authorities had themselves recorded that mala fides were absent. In that situation, the invocation of Rule 9(2) for the earlier period failed on limitation, and the duty claim for clearances prior to April 1976 was rejected as time-barred in favour of the assessee.

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Issues: Whether the demand of duty for clearances made prior to April 1976 could be sustained under Rule 9(2) of the Central Excise Rules when the authorities found no mala fides.

Analysis: The demand related to clearances over a period beginning in March 1975. The authorities themselves recorded that mala fides were absent. On that basis, the invocation of Rule 9(2) for the earlier period was not sustainable, and the claim for duty for clearances prior to April 1976 could not survive limitation.

Conclusion: The demand of duty for clearances prior to April 1976 was held to be time-barred and was rejected in favour of the assessee.

Ratio Decidendi: Where mala fides are absent, a demand under Rule 9(2) of the Central Excise Rules cannot be sustained for the earlier period beyond limitation.

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