Extended limitation in excise duty demands fails when declarations are filed bona fide without collusion or deliberate misdeclaration.

In an excise valuation dispute, the extended period of limitation was held unsustainable where the assessee filed classification and price declarations on the basis of information supplied by the principal manufacturer and there was no evidence of collusion or deliberate misdeclaration. The Tribunal treated the declarations as made in bona fide belief, and found no material showing that the declared price was knowingly false. As a result, the demand could not be enforced on limitation, and the consequential interest and penalty were also set aside.

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Issues: Whether the demand could be sustained by invoking the extended period of limitation when the assessee had filed the classification list and price list on the basis of declarations furnished by the principal manufacturer and there was no evidence of collusion or deliberate misdeclaration.

Analysis: The appeal related to duty demanded on processed fabrics cleared during 1997 and up to May 1998 on the allegation of undervaluation of grey fabrics supplied for job work. The assessee had filed the relevant declarations under the Central Excise Rules, 1944 on the basis of information supplied by the merchant manufacturer. The Tribunal noted that, for the same assessee in a similar dispute, limitation had earlier been accepted where the declaration was made under a bona fide belief and there was no evidence of collusion with the traders. In the absence of material showing that the assessee had joined hands in any wrong declaration or that the declared price was knowingly false, the extended period could not be invoked.

Conclusion: The invocation of the extended period of limitation was not sustainable. The demand was not enforceable on limitation and the consequential interest and penalty were also liable to be set aside.

Final Conclusion: The appeal succeeded on the question of limitation, with the entire demand and connected consequences set aside.

Ratio Decidendi: Extended limitation cannot be invoked for excise demand where declarations were filed on the basis of supplier information in bona fide belief and no evidence of collusion or deliberate misdeclaration is shown.

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