Limitation in excise demand turns on departmental knowledge and absence of suppression in an undervaluation dispute.

The Tribunal held that a demand for undervaluation was time-barred because the department had already examined the same issue in 1996 and the appellant had responded, after which no further action was taken. On those facts, the relevant material was within the department's knowledge well before the show cause notice issued in January 2005, and there was no established suppression, misstatement, or mala fide conduct by the appellant. The amendment to Section 4 of the Central Excise Act was also already within Revenue's knowledge. The demand was therefore barred by limitation, and the impugned order was set aside.

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Issues: Whether the demand was barred by limitation on the ground that the material facts were already within the knowledge of the department and no suppression or misstatement was established.

Analysis: The Tribunal noted that an identical enquiry on the same issue of undervaluation had been raised by the departmental authorities in 1996, and the appellant had responded to it. No further proceedings were initiated thereafter. On these facts, the Tribunal held that the department was already aware of the relevant facts long before the show cause notice issued in January 2005. The amendment to Section 4 of the Central Excise Act was also within the Revenue's knowledge, and the mere lapse of time could not extend the limitation period in the absence of mala fide conduct or suppression by the appellant.

Conclusion: The demand was barred by limitation and the impugned order was set aside on that ground. The appeal was allowed with consequential relief.

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