Extended limitation for excise duty demands needs wilful suppression; mere non-payment or licensing lapse is insufficient.

Extended limitation for central excise duty demands under Section 11A(1) applies only where the department shows wilful suppression of facts, fraud, collusion, misstatement, or other positive conduct with intent to evade duty. Mere non-payment of duty or failure to obtain a licence is not enough, particularly where the dispute is debatable and a bona fide doubt exists. On the stated facts, there was no material of such intent or suppression, so the longer limitation period could not be invoked and the demand was time-barred.

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Issues: Whether the extended period of limitation for demanding central excise duty could be invoked on the facts of the case.

Analysis: The demand related to a period commencing in 1989, while the notice was issued in 1994. The Court held that invocation of the extended period under Section 11A(1) of the Central Excise Act, 1944 required wilful suppression of facts or other positive conduct with intent to evade duty. On the record, there was nothing to show that the assessee had failed to obtain licence or pay duty because of fraud, collusion, wilful misstatement, or suppression of facts. The Court relied on the settled principle that mere non-payment of duty or non-obtaining of licence, especially where the issue was debatable and a bona fide doubt existed, is insufficient to attract the longer limitation period.

Conclusion: The extended period of limitation was not invocable and the duty demand was time-barred.

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