Wilful suppression and intent to evade duty are essential before extended excise limitation can be invoked.

Extended limitation for central excise demand requires wilful suppression, fraud, collusion or misstatement with intent to evade duty. Where the goods were admittedly exempt and transferred between the manufacturer's units, but the record showed no material gain from concealment and the omission was treated as a bona fide error, the necessary element of intent to evade was absent. On that basis, the proviso to Section 11A(1) could not be invoked, and a demand raised beyond six months was time-barred.

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Issues: Whether the extended period of limitation could be invoked for demand of central excise duty on the ground of fraud, collusion, wilful misstatement or suppression of facts with intent to evade duty.

Analysis: The goods were admittedly exempt under the relevant notifications and were transferred to other units of the manufacturer. The assessee had not claimed the exemption or followed the prescribed Chapter X procedure, but the record did not show any material gain from concealment because the goods were otherwise wholly exempt. For the proviso to Section 11A(1), suppression must be wilful and intended to evade duty. The Collector himself noted absence of mala fides and characterised the lapse as a bona fide error. On these facts, the necessary element of wilful suppression was absent, and the demand covering a period beyond six months could not be sustained.

Conclusion: The extended period of limitation was not available, and the duty demand was time-barred.

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