Limitation under central excise law cannot rest on disclosed computation methods absent suppression or wilful misstatement.

Repeated disclosure of the computation method through letters, ER-1 returns, invoices and work-order details meant the department was on notice of the basis adopted under Rule 6(3)(b) of the CENVAT Credit Rules. On that factual basis, a wrong method of computation did not amount to suppression of facts or wilful misstatement with intent to evade duty, so the extended period under the proviso to Section 11A of the Central Excise Act, 1944 could not be invoked. The demand was therefore held time-barred and the penalty set aside.

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Issues: Whether the demand was barred by limitation and whether the extended period could be invoked on the facts disclosed to the department.

Analysis: The appellant had repeatedly informed the department through letters, ER-1 returns, invoices, and work-order split-up details about the manner of computation adopted under Rule 6(3)(b) of the CENVAT Credit Rules. The department was thus put on notice of the method used for arriving at the amount payable. On these facts, the omission or wrong method of computation could not be treated as deliberate suppression of facts or wilful misstatement with intent to evade duty. The proviso to Section 11A of the Central Excise Act, 1944, being a serious exception, could be invoked only on proof of such deliberate conduct.

Conclusion: The extended period of limitation was not invokable, the demand was time-barred, and the assessee succeeded on the limitation issue.

Final Conclusion: The impugned demand and penalty were set aside because the proceedings were held to be barred by limitation.

Ratio Decidendi: Where the assessee has disclosed the relevant computation method and supporting particulars to the department, a mere wrong method of computation does not amount to suppression of facts or wilful misstatement so as to justify invocation of the extended period under Section 11A of the Central Excise Act, 1944.

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