Extended limitation under central excise law was rejected where clearances were disclosed and made with departmental permission.

Clearances of goods made for an international competitive bidding project, after obtaining jurisdictional permission to clear without payment of duty and disclosing the clearances in ER-1 returns, did not justify a finding of suppression or intent to evade. On those facts, the extended period of limitation could not be invoked, so the central excise demand for the earlier period was time-barred. As the duty demand itself failed, the associated interest and penalty also could not be sustained and were set aside.

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Issues: Whether the demand of central excise duty was sustainable when the clearances were made under exemption notifications with departmental permission and disclosure in returns, and whether the invocation of the extended period of limitation was justified.

Analysis: The goods were cleared for execution of work awarded under international competitive bidding, and the appellant had sought and obtained permission from the jurisdictional Assistant Commissioner to clear the goods without payment of duty. The clearance particulars were also reflected in the ER-1 returns. In these circumstances, the record did not support suppression of facts or an intention to evade duty. As the demand related to an earlier period and was raised beyond the normal limitation period, the entire demand was barred by limitation. Once the duty demand failed, interest and penalty could not survive.

Conclusion: The extended period of limitation was not invocable, the demand was time-barred, and the impugned duty, interest, and penalty were set aside in favour of the assessee.

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