Clandestine removal and suppression of facts justified extended limitation and sustained penalty under Central Excise law.

Clandestine removal and suppression of facts with intent to evade duty were treated as sufficient grounds to invoke the extended limitation period under Central Excise law. The notice, read as a whole, alleged removal of steel castings without duty payment, without gate passes, and without proper entry in statutory records, supported by shortages and unverifiable stock during verification. On those facts, the demand was held not time-barred and the extended period was available. Because the same findings established violation of the statutory rules, the penalty was also sustained. The appeal therefore failed on both limitation and penalty.

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Issues: (i) Whether the duty demand was barred by limitation and whether the extended period could be invoked on the facts alleged in the show cause notice. (ii) Whether the penalty imposed was sustainable.

Issue (i): Whether the duty demand was barred by limitation and whether the extended period could be invoked on the facts alleged in the show cause notice.

Analysis: The show cause notice, read as a whole, alleged removal of a large quantity of steel castings without payment of duty, without gate passes, without proper accountal in RG-1, and without disclosure in RT-12 returns and classification records. The unexplained shortage, the inability to correlate the full quantity during verification, and the reply seeking deletion of the balance from RG-1 supported the inference that the goods had been removed clandestinely. On these facts, the allegations were sufficient to found a charge of suppression of facts and clandestine removal with intent to evade duty, attracting the extended period of limitation.

Conclusion: The demand was not time-barred and the extended period was rightly applied, in favour of Revenue.

Issue (ii): Whether the penalty imposed was sustainable.

Analysis: Since clandestine removal and suppression of facts were established and the statutory requirements under the Central Excise Rules were violated, the basis for penalty survived along with the duty demand. The finding on limitation also did not assist the appellants on penalty.

Conclusion: The penalty was sustainable, in favour of Revenue.

Final Conclusion: The appeal failed on merits because the duty demand was upheld as within time and the penalty was also confirmed.

Ratio Decidendi: Where the show cause notice and surrounding facts disclose clandestine removal and suppression of facts with intent to evade duty, the extended period of limitation is available and consequential penalty may be sustained.

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