Extended limitation under central excise fails without proof of intent to evade duty; notice barred by limitation.

The extended limitation period under the proviso to Section 11A of the Central Excise Act could not be invoked without material showing deliberate suppression, fraud, misstatement or other conduct evidencing an intention to evade duty. Because the assessee had disclosed the audit objection and informed the department of its view that no reversal of Cenvat credit was required on removal of used capital goods, the notice was treated as unsupported by proof of evasion. The show cause notice was therefore held barred by limitation beyond the normal period, and relief was granted to the assessee.

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Issues: Whether the show cause notice invoking the extended period of limitation under the proviso to Section 11A of the Central Excise Act, 1944 was barred by limitation for want of proof of intention to evade duty.

Analysis: The dispute turned on the applicability of the extended limitation period. The appellant had disclosed the department's audit objection and, before issuance of the show cause notice, had informed the department of the view that no reversal of Cenvat credit was required on removal of used capital goods. In the absence of material showing deliberate suppression, fraud, misstatement, or other conduct evidencing an intention to evade duty, the proviso to Section 11A could not be invoked. The notice, therefore, was not sustainable beyond the normal limitation period.

Conclusion: The show cause notice was held to be hit by limitation and the appeal was allowed in favour of the assessee.

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