Extended excise limitation requires wilful suppression; duty within the normal period remains recoverable despite bar on extended period.

The extended limitation period under the proviso to Section 11A of the Central Excise Act applies only when non-levy or short-levy is proved to arise from fraud, collusion, wilful misstatement, suppression of facts, or other intent to evade duty. Mere non-registration or non-payment is insufficient where there is bona fide doubt on duty liability, including conflicting judicial views on whether crushing stones amounts to manufacture. The extended period was therefore not invocable. Duty, however, remained recoverable for the normal six-month period preceding the show cause notice, so the demand was sustained only to that extent.

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Issues: (i) Whether the extended period of limitation under the proviso to Section 11A of the Central Excise Act, 1944 was invocable on the facts of the case. (ii) Whether, if the extended period was not invocable, duty could still be recovered for the normal period of limitation.

Issue (i): Whether the extended period of limitation under the proviso to Section 11A of the Central Excise Act, 1944 was invocable on the facts of the case.

Analysis: The proviso to Section 11A applies only where non-levy or short-levy is attributable to fraud, collusion, wilful mis-statement, suppression of facts, or contravention with intent to evade duty. The Court relied on the settled principle that suppression must be wilful and that mere failure to obtain registration or pay duty does not by itself attract the extended period. It was found that there was divergence of judicial opinion on whether crushing of stones amounted to manufacture, creating a bona fide doubt on duty liability. In that background, the omission to take registration or pay duty was not shown to be due to wilful suppression or any intent to evade duty.

Conclusion: The extended period of limitation was not invocable, and this issue was decided in favour of the assessee.

Issue (ii): Whether, if the extended period was not invocable, duty could still be recovered for the normal period of limitation.

Analysis: Even though the extended period could not be applied, the show cause notice remained valid to the extent it covered the period within six months preceding its issuance. The Court held that duty lawfully leviable for that normal period was not lost merely because the larger period could not be invoked.

Conclusion: Recovery for the normal period of limitation was upheld, and this issue was decided in favour of the revenue.

Final Conclusion: The challenge to the invocation of the extended period failed, but recovery within the normal limitation period was sustained, resulting in only partial relief to the assessee.

Ratio Decidendi: The extended limitation under the proviso to Section 11A can be invoked only on proof of wilful suppression or other specified culpable conduct with intent to evade duty, while duty recoverable within the normal limitation period remains enforceable.

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