Excise duty limitation principle: disclosed classification and departmental acceptance confined demand to the ordinary one-year period.

Where the assessee disclosed the classification in returns and the department accepted it for nearly two decades, there was no suppression of facts or intention to evade duty. The demand for differential excise duty was therefore governed by Rule 10 of the Central Excise Rules, 1944, rather than Rule 10A or Rule 9(2), and had to be raised within one year. A show cause notice issued beyond that period for the relevant past period was barred by limitation and could not be sustained.

---

---

Issues: Whether the demand of differential excise duty was barred by limitation and liable to be set aside.

Analysis: The appellants had disclosed their classification in the returns and the department had accepted that classification for nearly two decades. On these facts, there was no suppression of facts or intention to evade duty. The appropriate provision was Rule 10 of the Central Excise Rules, 1944, and not Rule 10A or Rule 9(2). Under Rule 10, the demand had to be raised within one year, and the show cause notice issued on 13-10-1976 for the period 1-3-1973 to 31-8-1975 was beyond that period.

Conclusion: The demand was barred by limitation and could not be sustained.

Ratio Decidendi: Where the assessee has disclosed the relevant facts and the department has accepted the classification, the demand for differential excise duty is governed by the ordinary limitation period under Rule 10 of the Central Excise Rules, 1944, and not by the extended provisions.

---