Extended limitation and exemption under Item 68 turned on no suppression and no clubbing with Item 25 clearances.

Extended limitation could not be invoked because suppression of fact was not established; the department was already aware of the goods' nature through prior classification correspondence, so the notice was not time-barred on that basis. Notification No. 89/79-Central Excise applied only to clearances of goods falling under Item 68, and the value of goods assessed under Item 25 from another factory could not be clubbed to deny the exemption. The Tribunal's view was upheld, and the assessee retained the benefit of the exemption for Item 68 clearances alone.

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Issues: (i) Whether the show cause notice was barred by time in the absence of suppression of fact by the assessee; (ii) Whether Notification No. 89/79-Central Excise applied to the goods cleared under Item 68 without clubbing the value of goods cleared under Item 25 from another factory.

Issue (i): Whether the show cause notice was barred by time in the absence of suppression of fact by the assessee.

Analysis: The Tribunal found that the department was aware of the nature of the goods, as the assessee had sought clarification on classification and correspondence had passed between the parties before final classification. On that basis, the Tribunal held that suppression of fact was not established. That factual finding called for no interference.

Conclusion: The issue was decided against the Revenue.

Issue (ii): Whether Notification No. 89/79-Central Excise applied to the goods cleared under Item 68 without clubbing the value of goods cleared under Item 25 from another factory.

Analysis: The exemption notification granted relief only to goods falling under Item 68 and was confined to the first clearances of such goods up to the prescribed value. The goods manufactured at one factory were assessed under Item 25, while the goods from the other factory were assessed under Item 68. The value of goods not falling under Item 68 could not be added for deciding eligibility under the notification.

Conclusion: The notification was held applicable only to the Item 68 clearances, and clubbing with Item 25 clearances was disallowed.

Final Conclusion: The Tribunal's view was upheld, and the Revenue's challenge failed on both issues, leaving the assessee entitled to the benefit of the exemption on the Item 68 clearances alone.

Ratio Decidendi: An exemption notification limited to goods of a specified tariff item must be applied only to clearances of those goods, and clearances of goods assessed under a different tariff item from another factory cannot be clubbed for denying the exemption; likewise, where suppression of fact is not established, the extended limitation cannot be invoked.

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