Extended period cannot be invoked, if, even as per Department, there were doubts as to whether process amounted to manufacture

In the instant case, Sanjay Industrial Corporation (the Appellant) was engaged in profile cutting viz. cutting larger size plates into small size and shapes using gas cutting machines, as per requirements of customers.

The Department invoked extended period of limitation alleging that the process carried out by Appellant amount to manufacture and thus exigible to Excise duty.

The Appellant argued that in case of another assessee, Adjudication Order had found that there was doubt earlier whether process amounted to manufacture and had deleted penalty. Hence, owing to bona fide belief, there was no suppression of facts leading to invocation of extended period of limitation.

The Hon’ble Supreme Court held that when even as per the Department, there was certain doubt relating to excisability of process carried out by Appellant, the conduct of the Appellant was bonafide and hence extended period of limitation cannot be invoked.Further,Penalties were also set aside.