Extended limitation in excise demands requires proof of suppression or intent to evade; mere procedural lapse is insufficient.

The extended limitation period for excise demand was held unavailable because there was no evidence of fraud, collusion, wilful misstatement, or suppression of material facts with intent to evade duty. Mere non-compliance with excise formalities was treated as insufficient, particularly where the assessee acted under a bona fide belief about duty liability following earlier withdrawal of demands. The demand for the relevant period was therefore time-barred. On penalty, the tribunal found the original amount excessive in the circumstances and reduced it accordingly.

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Issues: Whether the demand of duty was barred by limitation under the extended period and whether the penalty called for interference.

Analysis: The appeal arose from a demand raised beyond the normal period on the allegation that the assessee had failed to comply with excise formalities with intent to evade duty. The majority found no evidence of any deliberate withholding of information or conscious suppression of material facts by the assessee. It was noted that the assessee had proceeded on a bona fide belief regarding duty liability in light of the earlier withdrawal of demands, and that mere non-compliance with formalities, without proof of fraud, collusion, wilful misstatement or suppression with intent to evade duty, was insufficient to sustain the extended period. On the penalty aspect, the majority considered the amount imposed to be excessive in the circumstances.

Conclusion: The extended period was not invocable and the demand for the relevant period was held to be time-barred. The penalty was reduced to Rs. 25,000/-.

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