Suppression and job work do not defeat excise duty liability; extended limitation and moderated unit penalty were sustained.

Suppression of actual manufacture and clearance of excisable goods justified invocation of the extended limitation period, because repeated intimation of factory closure did not disclose the real activity detected during departmental visit. Duty remained payable on aluminium circles manufactured in the unit, including where the work was described as job work, since liability stayed with the unit carrying out manufacture. Penalty on the manufacturing concern was considered warranted but moderated, while independent penalties on the proprietor and manager were not sustained because no separate basis existed once the proprietary concern had been penalised.

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Issues: (i) Whether the demand of duty was barred by limitation and the extended period could be invoked on the facts of the case; (ii) whether duty was payable on the aluminium circles cleared during the disputed period, including where the activity was claimed to be on job work basis; and (iii) whether the penalty on the manufacturing unit and the separate penalties on the proprietor and manager were sustainable.

Issue (i): Whether the demand of duty was barred by limitation and the extended period could be invoked on the facts of the case.

Analysis: The assessee had not disclosed the actual manufacture and clearance of excisable goods on the asserted job work basis, and the clandestine activity came to light only upon departmental visit. Repeated intimation of closure did not amount to disclosure of the actual manufacturing activity. In these circumstances, there was suppression of material facts and the assessee could not claim bona fides to resist invocation of the longer limitation period.

Conclusion: The extended period of limitation was correctly invoked against the assessee and the finding of time bar was set aside.

Issue (ii): Whether duty was payable on the aluminium circles cleared during the disputed period, including where the activity was claimed to be on job work basis.

Analysis: Even on the assessee's own case, the aluminium circles were manufactured in its unit. Goods manufactured on job work basis are treated as manufactured by the unit that carries out the process, and the duty liability remains on that unit. The facts disclosed clandestine manufacture and clearance without payment of duty.

Conclusion: Duty liability on the assessee was upheld and the demand was restored.

Issue (iii): Whether the penalty on the manufacturing unit and the separate penalties on the proprietor and manager were sustainable.

Analysis: In view of the factual circumstances, penalty on the unit was justified though the quantum deserved moderation. However, no separate justification existed for imposing independent penalties on the proprietor and the manager once penalty had been imposed on the proprietary concern.

Conclusion: The penalty on the manufacturing unit was reduced, while the separate penalties on the proprietor and the manager were set aside.

Final Conclusion: The revenue's challenge succeeded to the extent of restoration of duty demand and invocation of the extended period, but the personal penalties on the proprietor and manager were not sustained and the unit's penalty was moderated.

Ratio Decidendi: Suppression of the actual manufacturing activity and clearance of excisable goods, even when closure of the factory is intimated, justifies invocation of the extended period; job work does not shift the duty liability away from the unit that manufactures the goods.

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