CESTAT Delhi: Extended Limitation Not Invocable Without Proof of Intent to Evade Duty

January 28, 2026 : The Delhi Bench of the Customs Excise and Service Tax Appellate Tribunal has dismissed two appeals filed by the Revenue, holding that the extended period of limitation under Section 11A(4) of the Central Excise Act, 1944 cannot be invoked unless there is clear and concrete evidence of fraud, wilful misstatement or suppression of facts with intent to evade payment of duty.

The Bench, comprising Justice Dilip Gupta, President, and P. V. Subba Rao, Technical Member, was hearing appeals filed by the Commissioner of Central Excise and CGST, Udaipur, against two Udaipur-based assessees, Sonex Marble Pvt. Ltd. and Sonex Marmo Grani Pvt. Ltd..

The dispute related to the period from January 2013 to March 2016. During this time, the assessees were engaged in sawing marble blocks into slabs and tiles on a job work basis. The raw marble blocks were supplied by principal manufacturers, and after processing, the finished goods were returned to them. No central excise duty was paid on these job work activities.

The department initiated an investigation after receiving information from the Income Tax Department and took the view that sawing marble blocks amounted to “manufacture” under the Central Excise law. It alleged that the assessees had failed to obtain excise registration, did not file statutory returns and deliberately avoided payment of duty to wrongly claim the benefit of Small Scale Industry exemption. On this basis, show cause notices were issued invoking the extended period of limitation under Section 11A(4), along with proposals for interest and penalties under Section 11AC.

In the first round, the adjudicating authority confirmed the demands. However, the Commissioner (Appeals) set aside the orders in full. On Revenue appeal, the Tribunal, by an order dated 18 May 2023, remanded the matter for limited purposes such as recalculation of duty, valuation of job work goods and recomputation of SSI exemption.

Following the remand, the Additional Commissioner again confirmed the entire demand and penalties. On appeal, the Commissioner (Appeals) upheld the findings on merits but dropped the demands raised by invoking the extended period of limitation and set aside the penalties. As a result, no duty liability survived in the case of Sonex Marble Pvt. Ltd., while only a small demand falling within the normal period remained payable by Sonex Marmo Grani Pvt. Ltd.

The Revenue challenged only the dropping of the extended period demands before the Tribunal. It argued that non-registration, non-payment of duty and non-filing of returns for several years constituted wilful suppression, especially since the case came to light only after information was received from another department.

Rejecting these contentions, the Tribunal reiterated that suppression under Section 11A(4) requires a positive act accompanied by intent to evade duty. Mere procedural lapses or omissions are not enough. The Bench noted that even the Commissioner (Appeals) had initially dropped the entire demand, showing that the issue was capable of differing interpretations. In such circumstances, it was reasonable for the assessees to hold a bona fide belief that they were not liable to pay duty as job workers.

Holding that the department failed to establish the essential ingredients necessary to invoke the extended period of limitation, the Tribunal upheld the orders of the Commissioner (Appeals), dismissed both Revenue appeals and disposed of the cross-objections filed by the assessees.

Cause Title: Commissioner of Central Excise & CGST, Udaipur vs Sonex Marble Pvt. Ltd.
Case No.: Excise Appeal No. 52299 of 2024
Coram: Justice Dilip Gupta (President) and P. V. Subba Rao (Technical Member)