Extended limitation under central excise fails where classification non-disclosure is not suppression and the demand is revenue-neutral.

Mere non-mention of unbranded tobacco in the classification list did not, on these facts, establish suppression or wilful misstatement for extended limitation under central excise law, because departmental officers had been in physical control of the unit for years and were aware of the manufacturing activity. The demand was also treated as revenue-neutral, since duty credit would otherwise have been available, and in such a situation an intent to evade duty is not readily inferred. The extended period of limitation was therefore unavailable and the demand was time-barred.

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Issues: Whether the demand of central excise duty was barred by limitation and whether the extended period could be invoked on the alleged suppression or misdeclaration of facts.

Analysis: The classification list had referred to the unbranded tobacco, and the departmental officers had been in physical control of the unit for several years before the introduction of self-removal procedure. In such circumstances, the alleged non-mention of the product in the classification list did not establish suppression or wilful misstatement. The demand was also treated as revenue-neutral because, on the facts, credit that would have been available against the duty demand was not extended only because duty had not been paid in the earlier stage. Where the exercise is revenue-neutral, an intention to evade duty is not readily inferable.

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

Ratio Decidendi: Mere non-disclosure in a classification list does not justify invocation of the extended limitation period when the department was aware of the manufacturing activity and the transaction is revenue-neutral, as absence of intent to evade cannot then be inferred.

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