Extended limitation for excise duty demand fails where classification doubt and bona fide belief negate invocation of the proviso.

Central excise duty demand was held time-barred because the extended limitation period under the proviso to Section 11A could not be justified on the facts. The Tribunal accepted that there was a genuine departmental doubt over classification of master batches and that the assessee's belief that no further duty was payable was bona fide. It also noted that full particulars were declared in February 1981, the Chemical Examiner's report was available in June 1982, and the show cause notice was issued only in March 1984, covering a period beyond five years. The Revenue's attempt to treat the entire demand as within time therefore failed.

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Issues: Whether the demand of central excise duty was barred by limitation under the proviso to Section 11A of the Central Excise Act.

Analysis: The Tribunal noted that there had been a genuine doubt among departmental officers regarding the classification of master batches, and that the assessee's belief that no further duty was payable was bona fide. It also observed that the declaration containing full particulars was filed on 16-2-1981 and the Chemical Examiner's report was available in June 1982, yet the show cause notice was issued only on 30-3-1984 and even covered a period beyond five years. On these facts, there was no justification for invoking the extended period or for treating the entire demand as within time.

Conclusion: The demand was held to be time-barred and the Revenue's appeal failed.

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