Extended limitation upheld for suppression of material facts where earlier departmental communication on short levy was ignored.

Suppression of the receipt of moulds justified invocation of the extended limitation period where the assessee had not disclosed the material facts in returns or declarations and ignored an earlier departmental letter setting out the short-payment and demanding duty. The prior communication was treated as sufficient to connect the later show cause notice, so the proceedings were viewed as continuous from that date. As the duty liability on merits was not contested and the only substantial issue was limitation, the demand was held not to be time-barred and the limitation defence failed.

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Issues: Whether the demand was barred by limitation on the ground that the show cause notice was issued beyond the normal period and the extended period was inapplicable.

Analysis: The disputed duty liability on merits was not contested. The only substantial question was limitation. The prior departmental letter dated 13-1-1998 set out the short-payment, the receipt of moulds, the basis of computation, and called upon the assessee to pay the duty. The assessee ignored that communication and had not disclosed the receipt of moulds to the proper officer through returns, declarations, or any other material. On these facts, the earlier communication was treated as sufficient to connect with the later show cause notice and the proceedings were viewed as continuous from 13-1-1998. In the circumstances, the suppression of the receipt of moulds justified invocation of the extended limitation period.

Conclusion: The demand was not time-barred and the assessee's limitation plea failed.

Ratio Decidendi: Where suppression of material facts is established and an earlier departmental communication disclosing the short levy is ignored, the later notice may be sustained as part of continuous proceedings and the extended period of limitation may apply.

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