Extended limitation under excise law may apply where no licence or disclosure exists and bona fide belief is not proved.

Extended limitation under the proviso to Section 11A of the Central Excises & Salt Act, 1944 is attracted where excisable goods are cleared without licence, declaration or classification list, and the assessee cannot support a plea of bona fide belief with contemporaneous disclosure or evidence negating suppression and intent to evade duty. The text notes that liability on merits was not disputed, and that power-operated testing formed part of the manufacturing process on the facts. Prior precedents were treated as distinguishable because they involved departmental disclosure, approved classification or trade clarification, none of which existed here.

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Issues: Whether the extended period under the proviso to Section 11A of the Central Excises & Salt Act, 1944 was invokable on the facts, and whether the assessee had established a bona fide belief so as to negative suppression and intent to evade duty.

Analysis: The assessee did not dispute the liability on merits or the use of power in the process. The controversy was confined to limitation. The record showed that the assessee had not taken a licence, had not filed any declaration or classification list, and had cleared the goods without payment of duty. The laboratory equipment installed and the statement of the director showed that the incoming raw materials and outgoing finished products were subjected to power-operated testing, which formed part of the manufacturing process. In those circumstances, the plea of bona fide belief was not supported by contemporaneous disclosure or evidence. The precedents relied on by the assessee were found distinguishable on facts because, unlike those cases, there was no departmental disclosure, approved classification, or trade clarification supporting the assessee's stand.

Conclusion: The proviso to Section 11A of the Central Excises & Salt Act, 1944 was rightly invoked, and the demand for the extended period as well as the penalty were sustainable.

Ratio Decidendi: Extended limitation is invokable where excisable goods are cleared without licence or declaration and the assessee fails to prove a bona fide belief negating suppression and intention to evade duty.

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