Excise limitation under Rule 173PP(10) ran from year-end; absence of suppression made the demand time-barred.

Rule 173PP(10) required excise assessment at the close of the accounting year, with the limitation under Rules 10 and 11 computed from that close subject to the rule's modification. Where the department already knew of the assessee's manufacturing activity and no suppression of vital facts was shown, only the shorter limitation period applied. A show cause notice dated 27-3-1979 was therefore out of time for the year ended 30-6-1978, and it could not validly sustain duty for the year ended 30-6-1979 because that accounting year had not yet closed and assessment was not due.

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Issues: Whether the demand raised under Rule 173PP(10) of the Central Excise Rules was barred by limitation in the absence of suppression, and whether the show cause notice issued on 27-3-1979 could sustain duty for the relevant accounting years.

Analysis: Rule 173PP(10) required assessment at the close of the accounting year followed by the assessee, with Rules 10 and 11 applying subject to the modification that the period of six months or five years was to be computed from the close of that accounting year. On the facts, the department was already aware of the assessee's manufacturing activity, no suppression of vital facts was established, and therefore only the shorter limitation period could apply. The notice issued on 27-3-1979 was beyond time for the year ended 30-6-1978 and could not validly operate for the year ended 30-6-1979 because that accounting year had not yet closed and the assessment was not due.

Conclusion: The demand was time-barred and invalid, and the assessee was not liable to pay it.

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