Extended limitation unavailable where records disclosed short payment and no suppression by the assessee.

Duty demand was held sustainable on merits because it was based on the approved classification list and the duty actually payable under that classification, not on retrospective operation of the section 37B circular. However, the extended limitation period under the proviso to section 11A(1) was not available because the gate passes and RT-12 returns disclosed the clearances and duty paid, enabling the department to detect the short payment. The non-mention of the correct tariff heading did not amount to suppression, and no culpable omission by the assessee was shown. The demand was therefore barred beyond the normal limitation period.

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Issues: (i) whether the duty demand could be sustained on merits notwithstanding the Board circular; (ii) whether the extended period of limitation under the proviso to section 11A(1) of the Central Excise Act, 1944 was available.

Issue (i): whether the duty demand could be sustained on merits notwithstanding the Board circular.

Analysis: The circular issued under section 37B of the Central Excise Act, 1944 could not operate retrospectively. The demand, however, was not founded on that circular but on the fact that the duty paid was not in accordance with the classification list filed by the assessee and approved by the department. On the approved classification, the duty payable was different from the duty that had been paid.

Conclusion: The demand was sustainable on merits and this issue was decided against the assessee.

Issue (ii): whether the extended period of limitation under the proviso to section 11A(1) of the Central Excise Act, 1944 was available.

Analysis: The gate passes and the RT-12 returns disclosed the clearances and the duty paid thereon. From those records, the department could have seen that the duty paid was short of the duty payable. The non-mention of the correct tariff heading in the gate passes did not amount to suppression, and the failure to detect the short payment within six months was not attributable to any act or omission by the assessee.

Conclusion: The extended period was not available and the demand was barred by limitation, in favour of the assessee.

Final Conclusion: The appeal succeeded because the demand could not be sustained beyond the normal limitation period, and the impugned order was set aside.

Ratio Decidendi: Where the relevant records placed before the department disclose the short payment, the extended period of limitation cannot be invoked in the absence of suppression or other culpable omission by the assessee.

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