Clinch ing evidence and proof of suppression were required to sustain central excise duty demand, limitation, and partner penalty.

Duty demand on steel structures fabricated on job-work basis was found unsustainable because the record showed a separate registered unit, multiple job-workers, and supply of raw materials by the coloniser, while the adjudicating authority relied only on conjecture and incomplete enquiry. The extended limitation period was also rejected because suppression with intent to evade was not proved, the relevant period was not clearly stated, and the notification cited was not in force for that period. Penalty on the partner under Rule 209A failed because there was no finding that he dealt with excisable goods knowing or having reason to believe they were liable to confiscation.

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Issues: (i) Whether the demand of duty on the steel structures fabricated on job work basis was sustainable on the facts and evidence on record; (ii) whether the extended period of limitation was invocable on the allegation of suppression of facts; (iii) whether the penalty imposed on the partner under Rule 209A of the Central Excise Rules, 1944 was sustainable.

Issue (i): Whether the demand of duty on the steel structures fabricated on job work basis was sustainable on the facts and evidence on record.

Analysis: The demand was founded on an inference that the assessee and the coloniser were one unit and that the assessee alone executed the whole construction activity. The record, however, showed that the assessee was a separate registered unit, that fabrication activity was undertaken by multiple job-workers, and that raw materials were supplied by the coloniser to those job-workers. The adjudicating authority did not enquire into the role of the other job-workers and proceeded only on circumstantial material. A duty demand affecting civil liability must rest on clinching evidence and not on conjecture.

Conclusion: The demand of duty was unsustainable and was set aside in favour of the assessee.

Issue (ii): Whether the extended period of limitation was invocable on the allegation of suppression of facts.

Analysis: The show-cause notice did not clearly spell out the relevant period, and the allegation of suppression depended on an unestablished assumption that the steel structures had been clandestinely manufactured by the assessee. The notification relied upon in the notice was not in force for the relevant period, and no decisive finding was recorded on excisability or on the identity of the manufacturer. In the absence of proof of suppression with intent to evade duty, the extended limitation provision could not be applied.

Conclusion: The extended period of limitation was not invocable and the demand was barred by limitation in favour of the assessee.

Issue (iii): Whether the penalty imposed on the partner under Rule 209A of the Central Excise Rules, 1944 was sustainable.

Analysis: Penalty under Rule 209A required a finding that the person had dealt with excisable goods knowing or having reason to believe that they were liable to confiscation. The impugned order contained no such finding against the partner.

Conclusion: The penalty on the partner was not sustainable and was set aside in favour of the assessee.

Final Conclusion: The duty demand and both penalties failed, and the appellate relief resulted in complete success for the appellants.

Ratio Decidendi: A duty demand and penalty under the Central Excise law cannot be sustained on mere circumstantial inference; they must rest on clinching evidence, proof of suppression with intent to evade, and the specific statutory findings required for the particular penalty provision.

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