Extended period of limitation in central excise assessments denied where routine audit detects issues; time bar set aside orders.

Extended period of limitation for excise demand cannot be invoked where there is no pleaded or evidenced suppression, mis-statement or collusion; Revenue's reliance on routine audit detection is insufficient to displace the self-assessment regime. The article explains that regular filing and payment by the assessee, together with a bona fide alternative interpretation of law, preclude invocation of the extended limitation. Consequently, show cause notices based solely on routine audit findings are time-barred and orders founded on such notices must be set aside. The piece emphasises the officer's duty to scrutinise returns but limits extended assessment to cases with proven concealment.

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Issues: Whether the show cause notice demanding central excise duty based on handling charges is barred by limitation / whether extended period for issuance of notice is invocable.

Analysis: The issue turns on whether suppression, mis-statement, mis-declaration or collusion sufficient to invoke the extended period has been established and on the statutory scheme allocating responsibility for scrutiny and assessment. Section 72 places an obligation on the Central Excise Officer to scrutinise returns and make best judgment assessments where returns are incorrect or incomplete. A mere discovery by routine audit, without allegations and evidence of concealment or collusion, does not satisfy the threshold for invoking the extended period. The departmental case that the matter surfaced only because of audit, without proof of deliberate suppression, does not discharge the requirement for extended limitation. Authorities and administrative guidance emphasise the officer's duty to detect escaped duty through return scrutiny, and extended period cannot be invoked where assessees have a plausible alternate interpretation and have been regularly filing returns.

Conclusion: The show cause notice is barred by limitation and invocation of the extended period is not justified; consequential orders based on the notice are set aside in favour of the assessee.

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