Excise demand on prior approval and suppression: later overlapping notice fails, but undervaluation-based demand and penalty survive.

A later show cause notice based on the same or substantially similar facts cannot rely on suppression where the department already knew the underlying facts, so an extended-period demand on that basis fails. By contrast, retrospective amendment of excise law permits a short-levy demand even after approval of classification or price lists, and the absence of review under Section 35E does not bar action under Section 11A. On the facts, undervaluation and suppression were supported by seized costing sheets, parallel bills, and the sale pattern, so the demand, valuation adjustment, and penalty were sustained; cum-duty deduction was rejected because duty was shown as separately borne.

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Issues: (i) whether a subsequent show cause notice on the same or substantially similar facts could sustain a demand on the allegation of suppression and invocation of the extended period; (ii) whether, after approval of classification and price lists, a demand under Section 11A could be raised without prior review under Section 35E and whether the valuation and penalty demand could be sustained on the facts.

Issue (i): whether a subsequent show cause notice on the same or substantially similar facts could sustain a demand on the allegation of suppression and invocation of the extended period

Analysis: The second notice covered the same basic allegation of misdeclaration of value as the earlier notice, and the record showed that the department was already aware of the underlying facts. In such a situation, suppression could not be alleged afresh merely because a later notice covered an overlapping period. The reasoning followed the principle that a subsequent notice on the same facts cannot rest on alleged suppression already within departmental knowledge.

Conclusion: The second show cause notice was not sustainable on the ground of suppression, and the demand based on it failed in favour of the assessee.

Issue (ii): whether, after approval of classification and price lists, a demand under Section 11A could be raised without prior review under Section 35E and whether the valuation and penalty demand could be sustained on the facts

Analysis: The amended Section 11A authorised notice for short levy or short payment even where the earlier approval or assessment related to rate of duty or valuation. The provisions of Section 35E and Section 11A operated in different fields, so absence of review under Section 35E did not bar action under Section 11A. On facts, the department established undervaluation and suppression through seized costing sheets, parallel bills, and the sale pattern adopted by the assessee. The claim for cum-duty deduction was rejected because the buyer was shown to bear duty separately, and the materials already disclosed that the duty element had been excluded. The penalty was also upheld because the contravention and undervaluation stood established.

Conclusion: The demand, valuation adjustment, and penalty arising from the first notice were sustained, and the appeal challenging that order failed.

Final Conclusion: The dispute was allowed only to the extent of the later overlapping notice, while the original demand and penalty based on undervaluation and suppression were upheld.

Ratio Decidendi: After the retrospective amendment to Section 11A, excise duty can be demanded notwithstanding prior approval of classification or price lists, and a later notice on the same known facts cannot invoke suppression to extend limitation.

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