Extended limitation for excise duty fails where non-payment arose from bona fide belief and no deliberate suppression was proved.

Extended limitation for excise duty cannot be invoked merely because duty was not paid where the assessee acted under a bona fide belief based on divergent judicial views and there is no proof of deliberate suppression with intent to evade duty. The Tribunal noted that crushing limestone had already been treated as manufacture attracting duty, so the surviving issue was limitation. As the legal position on manufacture was conflicting, the assessee's belief that no duty was payable was held bona fide, and suppression with intent to evade was not established. The demand was therefore confined to the normal six-month period.

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Issues: Whether the extended period under the proviso to Section 11A of the Central Excises and Salt Act, 1944 could be invoked on the ground of suppression of facts when the assessee entertained a bona fide belief, based on divergent judicial views, that crushing of limestone did not amount to manufacture.

Analysis: The activity of crushing limestone had already been treated by the Court as manufacture attracting duty, so the only surviving question was limitation. The Tribunal noted that judicial opinions on whether crushing limestone amounted to manufacture were divergent and that the assessee's belief that no duty was payable could therefore be regarded as bona fide. Relying on the principle that mere failure to take a licence or pay duty does not by itself attract extended limitation where there is scope for doubt and no evidence of conscious knowledge of duty liability, the Tribunal held that suppression with intent to evade duty was not established.

Conclusion: The extended period under the proviso to Section 11A was not sustainable against the assessee; the demand was recoverable only within the normal period of six months.

Ratio Decidendi: Extended limitation for recovery of duty cannot be invoked merely because duty was not paid where the assessee acted under a bona fide belief arising from conflicting legal views and there is no proof of deliberate suppression with intent to evade duty.

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