Wilful suppression and extended excise limitation: demand and prosecution failed where deliberate evasion was not proved.

The extended limitation period under Section 11A(1) of the Central Excise Act applies only where short levy or non-levy results from fraud, collusion, wilful misstatement, or wilful suppression of facts, and not from a mere failure to pay duty. On the facts noted, the record did not show deliberate evasion or conscious suppression; subsequent inclusion of the disputed packing charges in assessable value also negatived any inference of wilful default. As the statutory foundation for invoking the proviso was absent, the demand order lacked authority of law and the criminal prosecution based on it could not survive.

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Issues: Whether proceedings could be commenced under the extended period in Section 11A(1) of the Central Excise Act on the basis of wilful suppression or wilful misstatement, and whether the consequential demand order and criminal prosecution could survive.

Analysis: The extended limitation under Section 11A(1) is available only where short levy or non-levy is attributable to fraud, collusion, wilful misstatement, or wilful suppression of facts, and not to a mere failure to pay duty. The material on record did not show any deliberate evasion or conscious suppression by the assessee. On the contrary, the conduct after the relevant Supreme Court decision showed inclusion of the disputed packing charges in assessable value from the stated date, which negatived any inference of wilful default. Since the foundation for invoking the proviso was absent, the demand order and the prosecution based on that order could not be sustained.

Conclusion: The extended period could not be invoked against the assessee, and the demand order was without authority of law. The criminal prosecution based on that order also failed.

Ratio Decidendi: The extended period under Section 11A(1) of the Central Excise Act can be invoked only on proof of fraud, collusion, wilful misstatement, or wilful suppression of facts, and not for a mere short levy or non-payment absent deliberate intent to evade duty.

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