Extended limitation cannot apply where fire loss was promptly reported and there was no suppression, fraud, or misstatement.

Duty on goods destroyed in a factory fire was examined in the context of Rule 21 remission and limitation under the extended period. The text states that the fire and destruction of stock were undisputed and promptly reported to the department, and that failure to file a remission application did not justify confirming duty on goods that had not been cleared from the factory. It further explains that, because the department had timely knowledge of the loss, invocation of the extended limitation period was not sustainable in the absence of suppression, fraud, or misstatement, and the demand was barred by limitation.

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Issues: Whether the demand of duty on goods destroyed in a fire was sustainable in the absence of a remission application and whether the show cause notice was barred by limitation.

Analysis: The fire in the factory and destruction of stock were undisputed, and the department had been informed promptly. Non-filing of a remission application under Rule 21 of the Central Excise Rules was held not to justify confirmation of duty on goods that had not been cleared from the factory. The decisive ground was limitation: as the department had knowledge of the fire and resultant loss, invocation of the extended period was not justified, and there was no basis to allege suppression, fraud, or misstatement.

Conclusion: The demand was barred by limitation and the impugned order was set aside in favour of the assessee.

Final Conclusion: The appeal succeeded and the assessee was granted consequential relief.

Ratio Decidendi: Where the department has timely knowledge of the relevant facts causing loss of duty exposure, the extended period of limitation cannot be invoked in the absence of suppression, fraud, or misstatement.

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