Extended limitation in central excise requires proven suppression of facts; unsubstantiated knowledge of error cannot justify the demand.

The demand of central excise duty was held to be time-barred because it was raised beyond the normal limitation period without proof of deliberate suppression of facts. The department sought to invoke the extended period on the allegation that the assessee knew of an error in the base clearance calculation and failed to disclose it, but no material substantiated such knowledge or suppression. In the absence of affirmative evidence of equivalent conduct, the extended period could not be applied merely on assertion, and the assessee succeeded.

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Issues: Whether the demand of duty was barred by limitation and whether the extended period could be invoked on the basis of alleged suppression of facts or awareness of a mistake in the fixation of base clearances.

Analysis: The appeal turned on the limitation issue. The demand was raised after the normal period, and the department relied on an allegation that the assessee knew of a mistake in the base clearance calculation and failed to point it out. There was, however, no substantiation of deliberate suppression of facts, and no material showing that the assessee was aware of any mistake. In the absence of proof of suppression, the extended period could not be invoked merely on an unsubstantiated assertion of knowledge.

Conclusion: The demand was held to be time-barred, and the invocation of the extended period was rejected. The order of the Collector (Appeals) was upheld in favour of the assessee.

Final Conclusion: The department's appeal failed because the demand could not be sustained beyond the normal limitation period without proof of suppression of facts.

Ratio Decidendi: The extended period of limitation cannot be invoked in central excise matters unless deliberate suppression of facts or equivalent conduct is affirmatively established by the department.

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