Extended limitation under central excise fails without proved suppression; confiscation and reduced penalties were nevertheless sustained.

Extended limitation for central excise duty could not be invoked without a proved suppression or misstatement, particularly where the assessee had filed a declaration disclosing the activity and departmental correspondence showed awareness, so the duty demand for 15.6.1979 to 30.11.1979 was barred by limitation and set aside. The confiscation of seized cotton fabrics was sustained, and the reduced redemption fine and penalty were maintained, while the assessee's objection to double duty on redyed fabrics was left open for factual verification and the department was directed to explain the basis of quantification before enforcing duty on the seized goods.

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Issues: (i) Whether the demand of duty for the period 15.6.1979 to 30.11.1979 was barred by limitation for want of suppression or misstatement; (ii) Whether the confiscation of the seized cotton fabrics and the allied duty quantification could stand.

Issue (i): Whether the demand of duty for the period 15.6.1979 to 30.11.1979 was barred by limitation for want of suppression or misstatement.

Analysis: The demand was sought to be sustained on the footing that non-obtaining of licence amounted to suppression so as to attract the extended period under Section 11-A of the Central Excises and Salt Act. The record, however, showed that the appellants had filed a declaration disclosing the nature of the activity and seeking exemption from licence requirement under Rule 174, and the departmental correspondence relied upon by the appellants supported their stand that the department was aware of the activity. In the absence of a specific suppression allegation in the notices and on the facts disclosed, the extended period could not be invoked.

Conclusion: The demand for duty for the period 15.6.1979 to 30.11.1979 was barred by limitation and was set aside in favour of the assessee.

Issue (ii): Whether the confiscation of the seized cotton fabrics and the allied duty quantification could stand.

Analysis: The seized goods were cotton fabrics and the confiscation order was therefore sustainable. At the same time, the assessee's plea that redyed fabrics should not be subjected to double incidence of duty was left open to factual verification, and the department was directed to indicate the basis of quantification before enforcing duty on the seized goods. The Board's reduction of redemption fine and penalty was not interfered with further.

Conclusion: The confiscation and the reduced redemption fine and penalty were sustained, subject to the direction regarding proper quantification of duty on the seized goods.

Final Conclusion: The appeal succeeded only to the extent of deleting the duty demand for the earlier period covered by the later show cause notice, while the confiscation and other consequential orders were maintained with directions on quantification.

Ratio Decidendi: An extended limitation period for central excise duty cannot be invoked in the absence of a proved suppression or misstatement, particularly where the assessee has disclosed the activity to the department and the demand notice does not specifically allege suppression.

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