Extended limitation in excise demands fails without proof of misdeclaration, leading to time-barred duty and relief on penalty and credit.

Extended limitation under Section 11A was not available because the record did not establish knowing misdeclaration in job-work clearances. The Tribunal found no convincing material of motive to suppress value, noting that duty was recoverable from the customer and the assessee operated under the deemed credit mechanism. Reliance on merchant statements also failed because the deponents were not produced for cross-examination, weakening the Revenue's case. As the foundation for extended limitation was absent, the duty demand was time-barred, and the consequential penalty and denial of deemed credit were set aside.

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Issues: Whether the duty demand could be sustained by invoking the extended period of limitation under Section 11A of the Central Excise Act, 1944, and whether the consequential penalty and denial of deemed credit were justified.

Analysis: The demand rested on alleged undervaluation in job-work clearances and on statements of merchants. The Tribunal found no convincing material showing that the assessee had any motive to advise misdeclaration, since duty was recoverable from the customer and the assessee was already operating under the deemed credit mechanism. It also held that the failure to produce the deponents for cross-examination undermined the Revenue's reliance on their statements. On the available record, the Tribunal concluded that knowingly concerned misdeclaration was not established, and therefore the foundation for invoking the extended limitation and for disallowing deemed credit was absent.

Conclusion: The duty demand was held to be time-barred, and the penalty as well as the denial of deemed credit were set aside in favour of the assessee.

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