Suppression of facts and extended limitation under Central Excise failed where the department already knew the relevant agreement and expenses.

The extended limitation period under the Central Excise Act could not be invoked without proof of suppression of material facts. The department had already been put in possession of the relevant agreement and the sales promotion expenses borne by the distributor, and an earlier adjudication had examined that agreement and found no flow back or mutuality of interest. In that setting, the distributor's bearing of sales promotion expenses was not a newly concealed fact. Suppression was therefore not established, and the later demand was barred by limitation.

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Issues: Whether the demand was barred by limitation and the extended period under the proviso to Section 11A of the Central Excise Act, 1944 could be invoked on the allegation of suppression of facts.

Analysis: The decisive question was whether the department had already been put in possession of the material facts relating to the agreement and the sales promotion expenses borne by the distributor. The earlier adjudication had examined the same agreement and recorded that nothing in its clauses indicated any flow back or mutuality of interest, and that order had taken the agreement into account. In that setting, the fact that the distributor was bearing the sales promotion expenses could not be treated as a newly concealed circumstance for the later notice. The element of suppression necessary to justify the extended period was therefore not established.

Conclusion: The demand raised by the later show cause notice was barred by limitation and invocation of the extended period was unsustainable.

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