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Issues: (i) Whether the extended period of limitation under the Central Excise law could be invoked on the allegation of suppression of facts with intent to evade duty, and whether penalty under the corresponding mandatory provision could be sustained. (ii) Whether duty on the alleged shortages could survive only for the normal period and not beyond one year from the date of the show-cause notice.
Issue (i): Whether the extended period of limitation under the Central Excise law could be invoked on the allegation of suppression of facts with intent to evade duty, and whether penalty under the corresponding mandatory provision could be sustained.
Analysis: The record showed that the appellate authority had already set aside the mandatory penalties, which indicated that the ingredients of wilful misstatement or suppression of facts with intent to evade duty were not established. The alleged shortages arose from differences in weighment and commercial accounting, while the Department did not establish conscious suppression or mala fide conduct sufficient to justify the extended limitation period. In the absence of proof of intent to evade, the basis for invoking the extended period was not available.
Conclusion: The extended period could not be invoked, and the demand beyond the normal limitation period was not sustainable.
Issue (ii): Whether duty on the alleged shortages could survive only for the normal period and not beyond one year from the date of the show-cause notice.
Analysis: Since suppression with intent to evade was not proved, the demand could survive only to the extent permissible within the normal limitation period. The authority directed recalculation of duty on the alleged shortages of phosphoric acid and sulphuric acid for the preceding one year only, together with applicable interest, leaving the remainder of the demand outside the limitation period unsustained.
Conclusion: Duty was sustained only for the normal period and the balance demand was set aside.
Final Conclusion: The appeals succeeded in part: the limitation-based challenge was accepted, but liability was retained only to the restricted extent of the normal period, with recalculation directed accordingly.
Ratio Decidendi: Where suppression of facts with intent to evade duty is not established and the corresponding mandatory penalty is set aside, the extended period of limitation cannot be invoked; duty demand can survive only within the normal period permitted by law.
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