Limitation for central excise demand: absent fraud or suppression, recovery cannot extend beyond the normal notice period.

A demand under Rule 9(2) of the Central Excise Rules, 1944 was treated as subject to the six-month limitation under Section 11A of the Central Excises and Salt Act, 1944 because the notice did not allege fraud, suppression, wilful misstatement, or similar conduct. In those circumstances, the extended limitation period was unavailable, and the demand could not be enforced retrospectively for the period before the show cause notice. The record also indicated prior departmental awareness of the activity. The penalty was therefore set aside as consequential to the time-barred demand.

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Issues: Whether the excise demand could be sustained for the period prior to the show cause notice and whether penalty could be imposed when the notice contained no allegation of fraud, suppression of facts, wilful misstatement, or similar conduct.

Analysis: The demand under Rule 9(2) of the Central Excise Rules, 1944 was subject to the limitation in Section 11A of the Central Excises and Salt Act, 1944. In the absence of allegations bringing the case within the extended period, only the normal six-month period was available. The record also showed that the Department had earlier been aware of the activity, and the demand could not be enforced retrospectively for the period preceding the show cause notice. Since the merits of classification were not argued, the adjudication was confined to limitation and the consequential penalty.

Conclusion: The demand was held enforceable only from the date of the show cause notice and not for the earlier period, and the penalty was set aside.

Ratio Decidendi: A demand under Rule 9(2) cannot be retrospectively enforced beyond the normal limitation period under Section 11A in the absence of allegations and proof of fraud, collusion, wilful misstatement, suppression of facts, or intent to evade duty.

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