Extended limitation cannot rest on alleged suppression when the department already knew the facts and earlier notice omitted it.

The Supreme Court of India reiterated that the extended period of limitation cannot be invoked unless suppression is specifically pleaded and clearly established. Where the department already knew the relevant manufacturing activity, the first show cause notice did not rely on the extended period, and a later notice proceeded on the same facts, those facts could not later be treated as suppressed to enlarge limitation. The bona fide plea was not rejected, and the absence of mala fides was also consistent with the refusal to impose penalty. On that basis, the demand was held time-barred and the Revenue's reliance on suppression failed.

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Issues: Whether the extended period of limitation could be invoked on the ground of suppression of facts, and whether the second show cause notice could validly rely on such suppression when the first notice had not invoked the extended period.

Analysis: The dispute centered on limitation rather than the substantive taxability issue. The facts showed that the department was aware of the manufacturing activity, the first show cause notice did not invoke the extended period, and the later notice proceeded on the same set of facts. Suppression must be specifically pleaded and clearly established, particularly where invocation of the extended period carries serious civil consequences. In these circumstances, the Court applied the settled principle that facts already within the knowledge of the department cannot later be treated as suppressed for extending limitation. The bona fide plea was also not rejected, and the absence of mala fides was consistent with the refusal to impose penalty.

Conclusion: The extended period of limitation was not available to the Revenue, and the impugned order could not be sustained on that basis.

Final Conclusion: The demand was held time-barred, the Revenue's reliance on suppression failed, and the appeal succeeded.

Ratio Decidendi: Where the relevant facts were already within the department's knowledge and the initial notice did not invoke the extended period, a subsequent notice on the same facts cannot validly allege suppression to extend limitation absent a clear and specific showing of concealment.

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