Extended limitation and Rule 6(3) on manufacturing residue were both held inapplicable on the stated facts.

Prior issuance of a show cause notice on the same issue meant no suppression could be attributed to the assessee, so the extended period of limitation was unavailable and the demand was time-barred. On the treatment of dolochar arising in sponge iron manufacture, the later binding view followed after reversal of the earlier Larger Bench position, so Rule 6(3) of the Central Excise Rules was not applied against the assessee on the facts. As both issues were resolved in favour of the assessee, no interference with the appellate order was warranted.

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Issues: (i) whether the demand was barred by limitation on the ground that no suppression could be attributed to the assessee, and (ii) whether Rule 6(3) of the Central Excise Rules applied to dolochar emerging in the manufacture of sponge iron.

Issue (i): whether the demand was barred by limitation on the ground that no suppression could be attributed to the assessee.

Analysis: The prior issuance of a show cause notice on the same issue was undisputed. In such circumstances, the finding was that the subsequent demand could not be sustained by invoking the extended period, as the element of suppression necessary for the longer limitation period was absent.

Conclusion: The demand was correctly held to be time-barred and the limitation objection was decided in favour of the assessee.

Issue (ii): whether Rule 6(3) of the Central Excise Rules applied to dolochar emerging in the manufacture of sponge iron.

Analysis: Dolochar was treated as a product emerging in the course of manufacture of sponge iron, but the Larger Bench view relied upon by the lower appellate authority had been reversed by the Bombay High Court and the later Tribunal view had followed that reversal. On that basis, the issue was treated as settled in favour of the assessee.

Conclusion: Rule 6(3) was not applied against the assessee on the facts, and this issue was also decided in favour of the assessee.

Final Conclusion: No ground was found to interfere with the order of the Commissioner (Appeals), and the revenue challenge failed.

Ratio Decidendi: Where prior proceedings on the same issue negate suppression, the extended period of limitation cannot be invoked; and a later binding view on the treatment of a manufacturing residue governs the applicability of Rule 6(3).

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