Extended limitation not available where Chapter X clearances followed an accepted understanding and later circular was unknown.

Duty-free procurement of sulphuric acid under Chapter X procedure against CT2 certificates was examined in the context of limitation under Section 11A. The record indicated that the jurisdictional officer knew of the manufacture of magnesium sulphate, and both sides proceeded on the understanding that magnesium sulphate was a fertilizer and that duty-free clearance was permissible under an earlier Board circular. As the later circular was not shown to have been known to either side, the conditions for invoking the extended limitation period were not established. The demand was therefore confined to the normal period under Rule 192 and Rule 196 of the Central Excise Rules, 1944.

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Issues: Whether the demand could be sustained for the extended period of limitation under Section 11A in respect of clearances made under Chapter X procedure, and whether the appellants were liable only for the normal period of duty demand.

Analysis: The appellants procured sulphuric acid under Chapter X procedure against CT2 certificates issued by the jurisdictional officer, who was aware of the manufacture of magnesium sulphate. The record showed that both sides proceeded on the understanding that magnesium sulphate was a fertilizer and that duty-free procurement was permissible, as reflected in the earlier Board circular. The change brought about by the later circular was not shown to have been known to either side. In these circumstances, the ingredients required to invoke the extended period were not established, and the limitation under Section 11A was held applicable to the present demand made under Rule 192 and Rule 196 of the Central Excise Rules, 1944.

Conclusion: The demand for the extended period was disallowed, and liability was confined to the normal period of one year counted backwards from the date of issue of the show cause notices, along with interest.

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