Limitation for central excise demand fails where no suppression or clandestine removal is alleged

A central excise demand for alleged non-accountal of raw naphtha was found time-barred because the show cause notice was issued nearly four years after the relevant transactions without any allegation of suppression or clandestine removal. The Tribunal treated the normal limitation under Rule 10 of the Central Excise Rules as applicable and declined to extend the limitation period merely because the demand was based on records and internal measurements. The demand therefore failed on limitation.

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Issues: Whether the demand of central excise duty was barred by limitation.

Analysis: The demand related to alleged non-accountal of raw naphtha within the factory premises, with no allegation of suppression or clandestine removal outside the factory. The show cause notice was issued for a long period after the relevant transactions, and the Tribunal found that a span of about four years could not be treated as reasonable. The case did not justify invoking a longer period merely because the demand was based on records and internal measurements, especially when the normal limitation under Rule 10 of the Central Excise Rules applied during the relevant time.

Conclusion: The demand was held to be time-barred, and the appeal succeeded on limitation.

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