Extended limitation cannot be invoked absent suppression where the department already knew the facts and delayed action.

Where all material facts were already known to the department and the assessee had taken central excise registration, the extended period of limitation could not be invoked in the absence of suppression of facts. The show cause notice was issued after inordinate departmental delay, and mere lapse of time by the department did not justify use of the longer limitation period. On that basis, the demand and penalty were held time-barred and were set aside, with the order in favour of the assessee sustained.

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Issues: Whether the demand and penalty were barred by limitation and whether the extended period could be invoked in the absence of suppression of facts.

Analysis: The assessee had taken central excise registration and the department was aware of the relevant facts, yet the show cause notice was issued after a long delay. In such circumstances, the material facts were not concealed and the department's inaction for more than two years could not justify invocation of the longer period. The decision relied on the principle that where the department is already aware of the facts and still fails to act within time, the demand is liable to be set aside as time-barred.

Conclusion: The extended period was not invocable, and the demand and penalty were correctly set aside on limitation.

Final Conclusion: The appeal failed because the demand was held to be time-barred and the order in favour of the assessee was sustained.

Ratio Decidendi: Where all material facts are known to the department and there is inordinate departmental delay, the extended period of limitation cannot be invoked in the absence of suppression of facts.

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