Natural transport losses and absence of suppression barred extended limitation, making the excise demand unsustainable.

Excise duty demanded on alleged excessive clinker losses during transport was found unsustainable because the losses were treated as natural and no fraud, collusion or wilful suppression of facts was shown. On that basis, the extended limitation under Section 11A of the Central Excises and Salt Act could not be invoked, so the demand raised beyond the prescribed period was barred by limitation. The impugned orders were quashed and relief was granted to the assessee.

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Issues: Whether the demand of excise duty on alleged excessive losses of clinker during transport was sustainable, and whether it was barred by limitation under Section 11A of the Central Excises and Salt Act.

Analysis: The petition challenged the duty demand on the ground that the clinker losses were natural and that the demand had been raised after the period prescribed under Section 11A. The Court recorded that the controversy had already been settled by its earlier judgment in connected matters, where it had been held that such losses were natural and, in the absence of fraud, collusion or wilful suppression of facts, the extended limitation could not be invoked.

Conclusion: The demand was held unsustainable and barred by limitation. The impugned orders were quashed, and relief was granted in favour of the assessee.

Final Conclusion: The excise demand based on transport losses of clinker could not be sustained and the writ petition succeeded.

Ratio Decidendi: Where duty is demanded on natural losses and the ingredients for extended limitation are absent, a demand raised beyond the prescribed period under Section 11A cannot be sustained.

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