Limitation in central excise demand: unexplained delay after completed investigation made the show cause notice time-barred.

Unexplained delay in issuing a show cause notice after investigation had concluded rendered the central excise demand time-barred. Shortage of finished goods and inputs was found and admitted on 28-01-2000, and no further investigative steps were shown thereafter, yet the notice was issued only on 16-04-2002. The CESTAT applied the principle in Gammon India Ltd. and rejected the plea that the matter was still under investigation. The Revenue's appeal failed because limitation under central excise law was not saved by any explained continuation of inquiry.

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Issues: Whether the demand of duty was barred by limitation because the show cause notice was issued long after the investigation had been completed.

Analysis: The shortage of finished goods and inputs was found on 28-01-2000 and the partner's statement admitting the shortages was recorded on the same day. No further investigation was shown to have continued thereafter, yet the show cause notice was issued only on 16-04-2002. In these circumstances, the delay remained unexplained and the plea that the matter was still under investigation could not be accepted. The earlier decision in Gammon India Ltd. was found applicable on the question of delayed issuance of notice and limitation under the central excise law.

Conclusion: The demand was held to be time-barred and the Revenue's appeal failed.

Ratio Decidendi: Where the investigation is complete and no further investigative steps are shown, an unexplained delay in issuing the show cause notice renders the duty demand barred by limitation under Section 11A of the Central Excise Act, 1944.

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