Limitation for central excise duty on bagasse failed where the by-product was not clandestinely produced or suppressed.

Duty demand on bagasse for 1-3-1975 to 29-4-1975 was time-barred because the notice was issued after the normal limitation period and the extended period under the proviso to Rule 10 of the Central Excise Rules, 1944 was not available. Bagasse was an inevitable by-product of sugarcane crushing in sugar manufacture, so its production could not be treated as clandestine and its removal could not reasonably be characterised as suppression of material facts from the Department.

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Issues: Whether the demand of duty on bagasse for the period 1-3-1975 to 29-4-1975 was barred by limitation, and whether the extended period could be invoked on the ground of suppression of material facts.

Analysis: The notice was issued long after the normal period of limitation had expired, so the demand could survive only if the extended period under the proviso to Rule 10 of the Central Excise Rules, 1944 was available. The relevant product was bagasse, an inevitable by-product of sugarcane crushing in the manufacture of sugar. In those circumstances, its production could not be treated as clandestine, and removal of bagasse could not reasonably be said to have been suppressed from the Department.

Conclusion: The extended period was not available, and the demand for 1-3-1975 to 29-4-1975 was barred by time.

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