Extended limitation under Central Excise requires proof of wilful suppression or intent to evade duty, not mere non-payment.

Extended limitation under the Central Excise Act cannot be invoked without positive evidence of wilful suppression or intent to evade duty; a bona fide belief, especially one supported by then-existing contrary decisions, negatives the larger period and the related penalty cannot stand once the demand is time-barred. On valuation, the assessable value need not include clearances made by an independent sub-contractor where the lower authority has excluded that value, no separate demand has been raised against the sub-contractor, and the record supports the exclusion. The impugned order was therefore sustained on limitation and valuation grounds in favour of the assessee.

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Issues: (i) Whether the demand of excise duty was barred by limitation and the extended period under the Central Excise Act could be invoked in the absence of wilful suppression or intent to evade duty; (ii) Whether the value of clearances undertaken through the sub-contractor M/s. Cut Max Engineering was liable to be included in the appellant's assessable value.

Issue (i): Whether the demand of excise duty was barred by limitation and the extended period under the Central Excise Act could be invoked in the absence of wilful suppression or intent to evade duty.

Analysis: The fabrication activity consisted of cutting, drilling, bending, punching and welding of duty-paid pipes and sheets supplied by customers on job-work basis, and the appellant received only labour charges. The record did not disclose any positive evidence of wilful suppression or deliberate misstatement to evade duty. The show cause notice was issued after the officers' visit and the appellant's statements, and the materials showed a bona fide belief that the activity did not amount to manufacture, supported by earlier decisions taking a similar view. In such circumstances, the larger period could not be sustained and penalty could not survive once the demand itself was time-barred.

Conclusion: The demand was held barred by limitation and the extended period was held inapplicable, in favour of the assessee.

Issue (ii): Whether the value of clearances undertaken through the sub-contractor M/s. Cut Max Engineering was liable to be included in the appellant's assessable value.

Analysis: The lower authority had excluded the value of goods fabricated by the independent sub-contractor, and no separate demand had been raised against that unit. The exclusion was found to be consistent with the record and no infirmity was found in the valuation treatment adopted in the impugned order.

Conclusion: The exclusion of the sub-contractor's value was upheld, in favour of the assessee.

Final Conclusion: The appeal of the assessee was allowed, the Revenue's appeal was rejected, and the impugned order was set aside on limitation without going into the merits of manufacture.

Ratio Decidendi: Mere non-payment of duty does not justify invocation of the extended period unless the Revenue proves positive, wilful suppression or misstatement with intent to evade duty; a bona fide view supported by then-existing contrary decisions negatives such suppression.

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