Limitation for excise duty demands and statutory penalty limits require clear proof of suppression and strict compliance.

Duty demands under Section 11A of the Central Excises and Salt Act are recoverable within six months, and the extended five-year period applies only where suppression, fraud, or similar misconduct is clearly established. The text also notes that a demand covering removals beyond the statutory maximum period is time-barred, and that mere allegations without specific evidence are insufficient to sustain extended limitation. On personal penalty, it states that a fresh notice cannot rest on a ground already dropped in an earlier notice, and any penalty imposed above the prescribed statutory maximum is unlawful.

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Issues: (i) Whether the demand of duty was barred by limitation, including the applicability of the extended period on allegations of suppression or fraud; (ii) Whether the personal penalty could be sustained, particularly when issued after an earlier notice was dropped and when the penalty exceeded the statutory maximum.

Issue (i): Whether the demand of duty was barred by limitation, including the applicability of the extended period on allegations of suppression or fraud.

Analysis: The demand related to removals during 1980-81 and 1981-82, while the show cause notice was issued on 1-8-1986. The statutory scheme under Section 11A of the Central Excises and Salt Act, 1944 permitted recovery within six months, extendable to five years only where suppression, fraud or similar misconduct was established. The demand for the period beyond 1-8-1981 fell outside the maximum five-year span. For the remaining period, the department did not establish suppression or fraud with specific evidence, and the record did not show why the alleged clearances escaped detection despite yearly checking and the asserted departmental physical control.

Conclusion: The duty demand was barred by limitation and was unsustainable.

Issue (ii): Whether the personal penalty could be sustained, particularly when issued after an earlier notice was dropped and when the penalty exceeded the statutory maximum.

Analysis: A prior show cause notice on the same allegation of non-maintenance of accounts had already been dropped, so no fresh notice could be founded on that ground. In any event, the penalty imposed exceeded the maximum prescribed under the relevant rules, which rendered the penalty order illegal.

Conclusion: The personal penalty was unsustainable.

Final Conclusion: The demand and penalty were both set aside, and the appellant succeeded with consequential relief.

Ratio Decidendi: A duty demand under Section 11A of the Central Excises and Salt Act, 1944 cannot survive beyond the statutory limitation period, and the extended period can be invoked only on clear proof of suppression or fraud; a penalty imposed without statutory authority or in excess of the prescribed maximum is invalid.

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