Extended limitation in excise demands fails without clear allegations of suppression, fraud or wilful misstatement in the notice.

Central excise duty demand was challenged on limitation, with the extended period found unavailable because the show cause notice did not clearly allege suppression, fraud or wilful misstatement. The notice only stated that chemical test results showed the goods were not eligible for exemption and duty was payable at tariff rate, which did not disclose the jurisdictional basis needed to extend limitation. A wrong rule reference and later corrigendum did not cure that defect because the foundation for invoking extended limitation had to appear in the notice itself or be plainly inferable from it. The demand was therefore time barred and the confirmation of duty could not stand.

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Issues: Whether the demand of central excise duty was barred by limitation and whether the extended period could be invoked in the absence of any clear allegation of suppression, misstatement or fraud in the show cause notice.

Analysis: The show cause notice stated only that, on chemical test, the goods were not eligible for exemption and therefore duty was payable at the tariff rate. It did not disclose the factual basis of the demand in a manner that supported invocation of the extended period, nor did it contain any clear allegation of suppression, fraud or wilful misstatement. The reference to the wrong rule and the later corrigendum did not cure the defect, because the essential jurisdictional foundation for extending limitation had to appear from the notice itself or be plainly inferable from it. In these circumstances, the demand was found to be time barred and the order confirming duty could not stand.

Conclusion: The demand was held to be time barred and the assessee succeeded on the limitation issue.

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