Extended limitation for excise duty applies where suppression exists at clearance; later departmental knowledge does not defeat the notice.

Where excise duty is short-paid because the assessee suppressed the higher price charged from customers at the time of clearance, the extended limitation under section 11A remains available from the date of clearance, and later departmental discovery through invoices or correspondence does not defeat that period. The notice was therefore treated as timely, but the demand had to be recalculated for the period within five years from the notice, with permissible deductions under section 4 considered at the stage of requantification on supporting evidence.

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Issues: Whether the show cause notice was barred by limitation and whether the extended period under section 11A could be invoked on the ground of suppression of facts; and whether the demand required requantification after excluding the period beyond five years and considering permissible deductions.

Analysis: Duty becomes payable at the time of clearance of goods. Where an assessee short-pays duty by suppressing the fact that a higher amount is being charged from customers, the Department is entitled to invoke the extended period prescribed by section 11A of the Central Excises and Salt Act, 1944. Subsequent knowledge of the relevant facts obtained by the Department from invoices or correspondence does not undo the suppression existing at the time of clearance, nor does the statute require notice to be issued within six months from the date of such knowledge. On quantification, the demand had to be recalculated only for the period within five years from the show cause notice, and the assessee was permitted to raise the plea for permissible deductions under section 4 at the stage of requantification on proper evidence.

Conclusion: The show cause notice was held to be within time and the extended limitation period was rightly invoked. The matter was remitted for fresh quantification of the demand within the permissible period, with consideration of any lawful deductions supported by evidence.

Ratio Decidendi: For short-paid excise duty caused by suppression of facts at the time of clearance, the extended limitation under section 11A is available from the date of clearance, and later departmental knowledge does not defeat that statutory period.

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