Excise limitation and suppression: prior departmental knowledge defeats the extended period where no evasion-based suppression is shown.

Rule 9(2) applies to clandestine removal of dutiable goods, and the extended limitation under Section 11A can be invoked only where suppression to evade duty is established. Where the department had long been aware of the manufacturing activity, including from earlier proceedings, failure to appreciate the effect of a changed notification did not by itself amount to suppression. The demand was therefore time-barred, and the assessee succeeded on limitation.

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Issues: Whether the demand under Rule 9(2) read with Section 11A was barred by limitation for want of suppression to evade duty.

Analysis: Rule 9(2) applies to clandestine removal of dutiable goods, and the limitation principles in Section 11A govern the invocation of the extended period. The activity of manufacturing the goods was within the department's knowledge for years, including from earlier proceedings in which separate licensing was held unnecessary. In these circumstances, mere failure by the assessee to appreciate the effect of the changed notification did not constitute suppression. Since suppression was not established, the extended period could not be invoked.

Conclusion: The demand was time-barred and the assessee succeeded on the plea of limitation.

Ratio Decidendi: Where the department had prior knowledge of the activity in question, non-compliance with a changed notification does not by itself amount to suppression for invoking the extended period under excise limitation provisions.

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