Excise limitation turns on wilful suppression with intent to evade duty; fresh notice after transfer of proceedings was valid.

Under excise law, a transfer of pending proceedings under Section 8 of the Central Excise (Amendment) Act, 1985 did not bar the Collector or Additional Collector from issuing a fresh show cause notice. For limitation, the extended period under the proviso to Section 11A required suppression of facts with intent to evade duty; that element was not established where clearances moved from one factory of the same manufacturer to another and the available exemption procedure under Notification No. 118/75 and Chapter X applied. Mere use of an incorrect notification or valuation basis was insufficient. The demand was therefore time-barred.

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Issues: (i) Whether, after transfer of pending proceedings under Section 8 of the Central Excise (Amendment) Act, 1985, the Collector or Additional Collector could issue a fresh show cause notice. (ii) Whether the extended period under the proviso to Section 11A of the Central Excises Act, 1944 could be invoked on the allegation of suppression of facts and intent to evade duty in respect of clearances from one factory to another of the same manufacturer.

Issue (i): Whether, after transfer of pending proceedings under Section 8 of the Central Excise (Amendment) Act, 1985, the Collector or Additional Collector could issue a fresh show cause notice.

Analysis: Section 8 required pending proceedings to be continued by the Collector of Central Excise from the stage at which they stood, but it did not prohibit issuance of a fresh notice by the Collector or Additional Collector. The transfer of proceedings did not create a bar against a fresh notice merely because the matter had earlier been initiated before another authority.

Conclusion: The fresh show cause notice was not invalid on that ground.

Issue (ii): Whether the extended period under the proviso to Section 11A of the Central Excises Act, 1944 could be invoked on the allegation of suppression of facts and intent to evade duty in respect of clearances from one factory to another of the same manufacturer.

Analysis: The goods were manufactured in one unit and transferred for use in another factory of the same manufacturer. The exemption under Notification No. 118/75, read with the procedure under Chapter X of the Central Excise Rules, 1944, was available for such clearances. Although duty had in fact been paid, the record did not support a finding that any suppression of facts was made with intent to evade duty. The mere adoption of an incorrect notification and valuation basis did not establish the requisite wilful suppression for the extended limitation period.

Conclusion: The proviso to Section 11A could not be invoked and the demand was time-barred.

Final Conclusion: The demand was set aside because the extended limitation was unavailable, and the appeal succeeded.

Ratio Decidendi: The extended period of limitation under the excise law cannot be applied unless suppression of facts is shown to have been committed with intent to evade duty; where that element is absent, the demand is barred by time.

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