Clandestine removal with fraud and suppression keeps limitation and penalty alive despite pre-notice duty payment.

In clandestine manufacture and clearance of man made fabrics without statutory records or duty payment, the article states that fraud and suppression with intent to evade duty defeat the argument that a show cause notice must be issued within one year of the officers' visit, so the limitation objection fails. It also states that pre-notice payment of duty does not eliminate liability to interest and penalty under the Central Excise scheme where fraud and suppression are involved, particularly when a reduced-penalty option is offered but not timely exercised. The demand and penalty are therefore treated as sustained.

---

---

Issues: (i) whether the show cause notice was time-barred on the ground that it was not issued within one year of the officers' visit; (ii) whether payment of duty before issuance of the show cause notice eliminated liability to penalty under the Central Excise law.

Issue (i): whether the show cause notice was time-barred on the ground that it was not issued within one year of the officers' visit

Analysis: The demand arose from clandestine manufacture and clearance of man made fabrics without recording the transactions in statutory records and without payment of duty. The admitted facts were treated as showing fraud and suppression with intent to evade duty. On that basis, the argument that the notice had to be issued within one year from the date of the officers' visit was rejected, as no such rule governs the issuance of notice in these circumstances.

Conclusion: The limitation objection failed and the demand was not held to be time-barred.

Issue (ii): whether payment of duty before issuance of the show cause notice eliminated liability to penalty under the Central Excise law

Analysis: Since the case was treated as one involving fraud and suppression, the applicable consequence was penalty under the statutory scheme then in force, together with interest. The payment of duty before the notice did not erase the penal consequence, particularly when the adjudicating authority had also extended the statutory option of reduced penalty which was not exercised within time.

Conclusion: Penalty was held to remain leviable despite pre-notice payment of duty.

Final Conclusion: The appeal failed on both limitation and merits, and the Revenue's demand and penalty were sustained.

Ratio Decidendi: In a case of clandestine removal involving fraud and suppression with intent to evade duty, pre-notice payment of duty does not by itself defeat the statutory liability to interest and penalty, and no limitation can be inferred merely from the date of officers' visit.

---