Extended limitation barred where department knew of site erection activity; capital goods exemption applied subject to output verification.

Departmental knowledge of the assessee's assembly and erection activity at customers' premises prevented invocation of the extended limitation period under Section 11A(1); a mere failure to file classification lists or price lists did not amount to suppression, so the demand beyond the normal period was barred. Notification No. 67/95-C.E. was also held applicable to the turbine generating set assembled and erected at site, because the exemption covered capital goods manufactured in a factory and used in the factory of production without adding any requirement that the same manufacturer must use them in his own factory. The exemption remained subject to verification that the generating set exceeded 75 KVA, and the penalty was set aside.

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Issues: (i) whether the demand of duty was barred by limitation and the extended period under Section 11A(1) of the Central Excises Act was invokable; (ii) whether the appellants were entitled to the benefit of Notification No. 67/95-C.E. in respect of the turbine generating set assembled and erected at site.

Issue (i): whether the demand of duty was barred by limitation and the extended period under Section 11A(1) of the Central Excises Act was invokable.

Analysis: The Department was aware that the appellants were assembling and erecting turbine generating sets at customers' premises. Once such facts were known, suppression could not be alleged merely because classification and price lists were not filed. The earlier decision on the same product had already held that the larger period was unavailable where the Department had knowledge of the material facts. Applying that reasoning, the later notice could not sustain the extended period.

Conclusion: The extended period of limitation was not invokable and the demand beyond the normal period was barred.

Issue (ii): whether the appellants were entitled to the benefit of Notification No. 67/95-C.E. in respect of the turbine generating set assembled and erected at site.

Analysis: Notification No. 67/95-C.E. exempts capital goods manufactured in a factory and used in the factory of production. The generating set fell within the description of capital goods, and the notification did not require use by the same manufacturer in his own factory. The benefit was therefore available, subject to verification that the turbine generating set had an output exceeding 75 KVA.

Conclusion: The appellants were entitled to the exemption under Notification No. 67/95-C.E., subject to verification of output exceeding 75 KVA.

Final Conclusion: The appeal succeeded, the demand was held time-barred beyond the normal period, the exemption claim was accepted subject to verification, and the penalty was set aside.

Ratio Decidendi: Where the Department is already aware of the relevant manufacture and erection activity, the extended period cannot be invoked on a mere allegation of non-filing of classification or price lists, and an exemption notification for capital goods used in the factory of production must be applied according to its terms without adding an unstated requirement of use by the same manufacturer.

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