Extended limitation not available without deliberate suppression or intent to evade duty in excise classification dispute

The extended limitation period for excise demand could not be invoked because the Department failed to show fraud, collusion, wilful misstatement, suppression of facts, or any intent to evade duty. The contemporaneous classification dispute, post-audit correspondence, and the assessee's bona fide belief on tariff classification indicated that non-disclosure in ER-1 returns was not a deliberate suppression. As the show cause notice was issued beyond the normal period, the demand was held time-barred and the notice could not be sustained.

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Issues: Whether the demand was barred by limitation on the ground that the extended period could not be invoked for want of suppression of facts or intent to evade duty.

Analysis: The relevant period was April 2013 to May 2013, while the show cause notice was issued on 29.02.2016. For invoking the extended period under Section 11A(4) of the Central Excise Act, 1944, the Department had to establish fraud, collusion, wilful misstatement, suppression of facts, or contravention with intent to evade duty. The correspondence after audit, the contemporaneous dispute on classification, and the pleaded bona fide belief regarding the tariff entry showed that the non-disclosure in ER-1 returns was not a conscious or deliberate suppression with intent to evade duty. In the absence of such ingredients, the normal limitation applied and the notice was time-barred.

Conclusion: The demand was barred by limitation and the extended period was not invokable, in favour of the assessee.

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