Proof of actual repacking is essential for excise duty, while extended limitation requires evidence of suppression or intent to evade.

Central excise duty on alleged repacking of maize starch into 1 kg retail packs cannot be sustained without admissible evidence proving that the repacking actually occurred at the premises during the relevant period. Mere presence of machinery or prior repacking activity was held insufficient, and the record did not establish procurement or use of the relevant packing material or actual manufacture at site. Extended limitation and penalty likewise require proof of fraud, suppression, wilful misstatement, or intent to evade duty; in the absence of such evidence, they are not justified. On these facts, the duty demand, extended limitation, and penalty were unsustainable.

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Issues: (i) whether repacking of maize starch powder into 1 kg retail packs at the appellant's premises was proved so as to attract central excise duty; (ii) whether invocation of the extended period of limitation and penalty was sustainable.

Issue (i): whether repacking of maize starch powder into 1 kg retail packs at the appellant's premises was proved so as to attract central excise duty.

Analysis: The decision turned on absence of admissible and conclusive evidence of repacking during the relevant period. Mere availability of machinery or the fact that repacking had occurred in the past was held insufficient. The record did not establish procurement or use of one kilogram packing material for the appellant's premises, nor was there material showing actual manufacture or repacking at the site. The finding that the activity was carried on could not be sustained on the available evidence.

Conclusion: The issue was decided in favour of the assessee and against the duty demand.

Issue (ii): whether invocation of the extended period of limitation and penalty was sustainable.

Analysis: The liability was also tested against the surrounding circumstances, including the trading of repacked goods received from another unit and the availability of Cenvat credit on bulk inputs. On the facts, there was no basis to infer fraud, collusion, suppression of facts, wilful mis-statement, or intent to evade duty. In the absence of proof of deliberate evasion, the extended limitation and penalty could not be justified.

Conclusion: The issue was decided in favour of the assessee and the penalty and extended limitation were set aside.

Final Conclusion: The duty demand and penalty were unsustainable for want of proof of manufacture by repacking and for absence of the ingredients necessary to invoke the extended limitation period.

Ratio Decidendi: A demand of central excise duty for alleged repacking cannot be sustained without conclusive evidence of the actual repacking activity during the relevant period, and extended limitation or penalty cannot be invoked without proof of fraud, suppression, or intent to evade duty.

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