Extended limitation in excise requires proof of suppression or intent to evade; bona fide classification belief defeated demand and penalty.

Extended limitation for central excise duty could be invoked only on proof of fraud, wilful misstatement, suppression of facts, or contravention with intent to evade duty. The record did not support deliberate misstatement, and the Department had earlier treated the products as non-dutiable under the then understood classification. The assessee's failure to obtain a licence or pay duty after introduction of the residuary tariff item was therefore not wilful suppression or intentional evasion, so the demand was time-barred and the penalty was unsustainable.

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Issues: Whether the demand of central excise duty was barred by limitation and whether penalty could be sustained when the assessee acted under a bona fide belief that the goods were not dutiable.

Analysis: The demand notice was issued long after the period for which duty was claimed. The extended limitation under the relevant excise rules could be invoked only if there was fraud, wilful misstatement, suppression of facts, or contravention with intent to evade duty. The finding of deliberate misstatement before the excise authorities was not supported by the record, and the Department itself had earlier proceeded on the view that the products were not exigible under the then understood classification. In these circumstances, the assessee's failure to obtain a licence or pay duty after the introduction of the residuary tariff item did not amount to wilful suppression or intentional evasion.

Conclusion: The extended period of limitation was unavailable, the demand was time-barred, and the penalty was unsustainable.

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