Suppression of facts not proved, so extended limitation, cess demand and penalty failed on reprocessed stock records.

Demand of jute manufactures cess on the alleged differential quantity was held unsustainable because the assessee's explanation that the quantity represented reprocessed material was supported by the Daily Stock Account, invoices, records and a Cost Accountant's certificate. The record also showed that waste from reprocessing had been duly accounted for and cleared on payment of cess. As suppression of facts was not established, the extended period of limitation could not be invoked. The equal penalty also failed and the findings below were set aside in favour of the assessee.

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Issues: Whether the demand of jute manufactures cess and equal penalty on the alleged differential quantity was sustainable, and whether the extended period of limitation could be invoked in the absence of suppression of facts.

Analysis: The differential quantity traced in the show cause notice was explained by the assessee as reprocessed material maintained in the Daily Stock Account, and the adjudication record itself showed that the quantity taken out for reprocess matched the figures in the relevant statements. The certificate of the Cost Accountant, supported by invoices and records, further showed that waste generated from the reprocessing activity was duly recorded and cleared on payment of jute manufactures cess. In these circumstances, the allegation of suppression was not made out, and the basis for invoking the extended limitation period failed.

Conclusion: The demand of cess and the penalty were unsustainable, and the findings below were set aside in favour of the appellant.

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