Extended limitation in excise demands fails when bona fide belief exists and no suppression or fraud is shown.

The extended limitation period under the proviso to Section 11-A of the Central Excise Act, 1944 was held unavailable where the assessee cleared plastic waste and scrap under a bona fide belief based on an earlier adjudication that the goods were not dutiable. In the absence of fraud, collusion, wilful misstatement or suppression of facts, the larger limitation period could not be invoked. As the demand itself failed on limitation, the consequential penalty also could not survive and was set aside.

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Issues: Whether the extended period of limitation under the proviso to Section 11-A of the Central Excise Act, 1944 could be invoked for duty on plastic waste and scrap when the assessee acted on a bona fide belief based on an earlier adjudication.

Analysis: The demand related to clearances made during a period when an earlier order of the original authority had held plastic waste and scrap to be not dutiable. On that basis, the assessee had a valid reason to believe that duty was not payable until the earlier order was set aside in appeal. In the absence of evidence of fraud, collusion, wilful misstatement, or suppression of facts, the extended period could not be applied. The penalty, being consequential to the demand, also could not survive.

Conclusion: The extended period of limitation was not invocable, and the demand and penalty were rightly set aside.

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