Bona fide belief on non-manufacture defeated suppression and barred extended limitation for duty demand.

The extended period of limitation under Section 11A was unavailable where the assessee had disclosed the goods as rejected consignments received for reconditioning and acted on the then prevailing view that remaking returned excisable goods into the same kind of goods did not amount to manufacture under Rule 173H. On those facts, the conduct could not be treated as suppression of facts or deliberate misdeclaration to evade duty, so the demand was barred by limitation. The duty demand and penalty therefore could not be sustained, and the impugned order was set aside.

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Issues: Whether the extended period of limitation under Section 11A was invocable in respect of duty demand on remade copper rods cleared after reconditioning.

Analysis: The assessee had filed declarations describing the goods as rejected consignments received for reconditioning. The Tribunal relied on the then prevailing view that remaking returned excisable goods into the identical kind of goods did not amount to manufacture within Rule 173H. On that basis, the assessee could legitimately have believed that duty was not payable on the returned and remade goods. In these circumstances, the conduct could not be characterised as suppression of facts or deliberate misdeclaration intended to evade duty. The premise for invoking the extended period therefore failed.

Conclusion: The extended period under Section 11A was not applicable and the demand was barred by limitation, in favour of the assessee.

Final Conclusion: The duty demand and penalty could not be sustained because the case was hit by limitation, and the impugned order was set aside.

Ratio Decidendi: Where an assessee acts on a bona fide and prevailing legal understanding that a process does not amount to manufacture, the case does not involve suppression of facts or intentional misdeclaration so as to justify invocation of the extended period of limitation.

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