Extended limitation and site-based exemption barred the excise demand, with penalty and interest also set aside.

Extended limitation under the Central Excise Act could not be invoked where the Department had already taken and finalised the assessee's status as a work contractor, so the demand was time-barred. Even assuming manufacturer status, goods made at the construction site for use in the same project fell within the site-based exemption, as "site" was to be read liberally under the applicable notifications and circular. With the duty demand failing on limitation and on merits, penalty and interest were unsustainable and were set aside.

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Issues: (i) Whether the demand could be sustained by invoking the extended period of limitation under the Central Excise Act. (ii) Whether the appellant was entitled to exemption for goods manufactured at the site of construction and, consequently, whether penalty and interest were sustainable.

Issue (i): Whether the demand could be sustained by invoking the extended period of limitation under the Central Excise Act.

Analysis: The same activity and status of the appellant had been examined earlier, and the Department had already proceeded on the footing that the appellant was only a work contractor and not the manufacturer. That earlier decision had attained finality. In such circumstances, the later invocation of the proviso to Section 11A for the period in question was not justified, and the demand was beyond limitation.

Conclusion: The invocation of the extended period was held to be unsustainable, and the demand was time-barred.

Issue (ii): Whether the appellant was entitled to exemption for goods manufactured at the site of construction and, consequently, whether penalty and interest were sustainable.

Analysis: Even on the assumption that the appellant was the manufacturer, the goods were produced at the construction site for use in the work undertaken there. The expression "site" was given a liberal meaning in the applicable notifications and supporting circular, and the goods fell within the scope of the site-based exemption. Once the demand failed, there was no basis for penalty or interest.

Conclusion: The exemption was held applicable, and the penalty and interest were set aside.

Final Conclusion: The duty demand was rejected as time-barred and unsustainable on merits, resulting in complete relief to the assessee.

Ratio Decidendi: Where the Department has already taken and finally concluded a position on the assessee's status and the goods are manufactured at the construction site for use there, the extended period cannot be invoked and the site-based exemption must be applied liberally.

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