Extended limitation for job-work scrap suppression upheld, but pre-introduction interest under Section 11AB was not recoverable.

Suppression and misdeclaration concerning non-return of scrap generated by job workers justified invocation of the extended limitation period where removal of semi-finished goods was permitted subject to return of waste and scrap; the duty demand and penalty were upheld. Interest under Section 11AB of the Central Excise Act, 1944 could not be levied for a period before that provision came into force, so the interest demand was set aside.

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Issues: (i) Whether the extended period of limitation was available on the facts, in view of the alleged suppression and misdeclaration relating to non-return of scrap generated by job workers; (ii) Whether interest under Section 11AB of the Central Excise Act, 1944 could be levied for a period prior to its introduction.

Issue (i): Whether the extended period of limitation was available on the facts, in view of the alleged suppression and misdeclaration relating to non-return of scrap generated by job workers.

Analysis: Permission for removal of semi-finished goods under Rule 57F(2) of the Central Excise Rules, 1944 was granted subject to the condition that waste and scrap should be returned by the job workers to the manufacturers. The scrap generated during job work was not declared, and the non-return of waste and scrap to the factory was not disclosed. On these facts, the Tribunal found misdeclaration and suppression with intent to evade duty.

Conclusion: The extended period was rightly invoked and the duty demand and penalty were upheld, against the assessee.

Issue (ii): Whether interest under Section 11AB of the Central Excise Act, 1944 could be levied for a period prior to its introduction.

Analysis: The liability to interest under Section 11AB could not operate retrospectively for a period relating to years before the provision came into force.

Conclusion: The interest demand was not sustainable and was set aside, in favour of the assessee.

Final Conclusion: The adjudication sustained the duty demand and penalty while deleting the interest demand, leaving the appeal only partly successful.

Ratio Decidendi: Suppression of material facts and misdeclaration in relation to job-work scrap justify invocation of the extended limitation period, but interest liability cannot be imposed for a period prior to the commencement of the charging provision.

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