Crushing stones into bajjri is manufacture under Central Excise, and suppression justified extended limitation for duty demand.

Crushing big stones into bajjri was treated as manufacture under Central Excise law because the process of crushing and similar mechanical operations on stone under Heading 25.05 produced a new marketable commodity with distinct character, use and commercial identity; the duty demand on that basis was upheld. The extended limitation period was also validly invoked because the record showed no disclosure of the crushing activity to the department, supporting suppression and failure to inform under the proviso to the limitation provision; the demands were sustained, with only one penalty reduced.

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Issues: (i) Whether crushing big stones into bajjri amounts to manufacture under the Central Excise law. (ii) Whether the extended period of limitation could be invoked for the duty demand.

Issue (i): Whether crushing big stones into bajjri amounts to manufacture under the Central Excise law.

Analysis: The definition of manufacture under Section 2(f) of the Central Excise Act, read with Chapter Note 2 of Chapter 25 of the Central Excise Tariff Act, specifically covers crushing, grinding and similar mechanical processes in relation to goods falling under Heading 25.05. The process converted bigger stones into a distinct commodity known in the market as bajjri, with a different character, use and commercial identity. The process therefore brought into existence a new and identifiable excisable product.

Conclusion: The crushing of stones into bajjri amounts to manufacture and the excise duty demand on that basis was justified, against the assessee.

Issue (ii): Whether the extended period of limitation could be invoked for the duty demand.

Analysis: The record did not show any disclosure by the assessee to the department regarding the crushing activity before commencement or during the relevant period. The assessee was held to have kept the revenue in the dark about the manufacture of bajjri, and the facts supported invocation of the proviso to Section 11-A of the Central Excise Act on the ground of suppression and failure to inform the department.

Conclusion: The extended period of limitation was validly invoked, against the assessee.

Final Conclusion: The appeals failed on the main legal challenges, but the penalty in one appeal was reduced from Rs. 1,50,000 to Rs. 1,00,000, while the remaining duty and penalty demands were sustained and the appeals were otherwise dismissed.

Ratio Decidendi: Where crushing operations create a separately recognized market commodity and the assessee does not disclose the activity to the excise authorities, the process amounts to manufacture and the extended limitation period may be invoked for suppression.

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