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Issues: Whether the extended period of limitation under the proviso to Section 11A(1) of the Central Excise Act could be invoked when the department was already aware that the buyer was the holding company of the assessee and the sales pattern was disclosed in prior proceedings.
Analysis: The show cause notice proceeded on the basis of suppression of facts and intent to evade duty. The assessee relied on earlier departmental proceedings and contemporaneous records to show that the relationship between the buyer and the assessee was already known to the department. The record also showed that the department had previously issued a notice referring to the buyer as the holding company and had acted on that basis. In these circumstances, the basis for alleging suppression for purposes of the extended limitation period was not sustainable.
Conclusion: The extended period of limitation was not invocable, and the demand and penalties could not be sustained on that basis.
Final Conclusion: The impugned order was set aside and the appeals were allowed on the ground of limitation, leaving the other issues undecided.
Ratio Decidendi: Where the department already has knowledge of the material facts forming the basis of the demand, the extended period for issuing notice on the ground of suppression is not available.
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