Per Shri T.P. Nambiar :

In this case, the demand of duty is Rs. 10,56,688.09 and penalty imposed is Rs. 50,000/-.

2. Shri V.J. Sankaram, learned Counsel appearing on behalf of the appellants contended before us that the demand is barred by limitation and the longer period of limitation under Section 11A of the Central Excise Act, 1944 cannot be invoked in this case and in this connection he pointed out that there was a first show cause notice issued by the AC dated 4.4.91. He pointed out that in that show cause notice, he had demanded duty for a period of six months and there was no averment of any wilful suppression on the part of the appellants. He pointed out that on the same set of facts the Commissioner issued the second show cause notice dated 13.8.91 alleging suppression. In this connection, he drew our attention to the recitals in the show cause notice at para 14 which reads as under :

14. "The assessees at the time of filing the classification list DCL effective from 1.12.87, 1.3.88, 1.4.88, 1.4.89 and 1.4.90 (Annexure XII to XVI) are appears to have suppressed the information that they were manufacturing Kurlopillo Kalapana branded pillows on behalf of KCPL who were not entitled to the SSI benefit under the Notification No. 175/86-CE. On account of this suppression with intent to evade duty proviso to Section 11A of Central Excises and Salt Act, 1944 would appear to be invokable in their case for demanding duty for the extended period."

He, therefore, stated that the gist of the show cause notice is to the effect that the appellants have suppressed information that they were manufacturing Kurlopillow on behalf of KCP who are not entitled to the SSI Notification No. 175/86 and on account of this suppression, longer period of limitation is invokable. In this connection he pointed that when the premises of the appellants were raided no incriminating documents were found in the premises. He also pointed out that in order to invoke the extended period of limitation, there must be clear evidence to show that the appellants have suppressed the material fact from the knowledge of the department with intent to evade payment of duty. He also pointed out that the department should mention in the show cause notice as to what are the omission and commission committed by the appellants to show that there was intention to evade payment of duty. In this connection he drew our attention to the judgement of the Hon'ble Supreme Court in the case of CCE Vs. HMM reported in 1995 (76) ELT 497. At para 2, their Lordships have held as under :

"2. The assessee contended before the Additional Collector of Central Excise that the show cause notice was time barred under the main part of Section 11A since it was issued after the expiry of the period of six months stipulated therein but the Additional Collector sustained the notice on the ground that it was within five years impliedly holding that the purported action was under the proviso to Section 11A of the Act. There is no dispute that the show cause notice cannot be sustained under sub-section (1) of Section 11A unless the proviso is attracted. Admittedly, it is beyond the period of limitation of six months prescribed under Section 11A (1) but it is within the extended period of 5 years under the proviso to that sub-section. Now in order to attract the proviso it must be shown that the excise duty escaped payment by reason of fraud, collusion or wilful mis-statement or suppression of fact or contravention of any provision of the Act or of the Rules made thereunder with intent to evade payment of duty. In that case the period of six months would stand extended to 5 years as provided by the said proviso. Therefore, in order to attract the proviso to Section 11A (1) it must be alleged in the show cause notice that the duty of excise had not been levied or paid by reason of fraud, collusion or wilful mis-statement or suppression of fact on the part of the assessee or by reason of contravention