Limitation under Central Excise law fails where department knew the facts and no suppression with intent to evade is shown.

Extended limitation under section 11A of the Central Excise Act cannot be invoked where the department already knew the relevant facts and the assessee had not suppressed material information with intent to evade duty. The record showed that the department's audit and the agreement with the brand owner disclosed the supply of proprietary items, and the assessee had filed regular RT-12 returns and given clarifications on the nature of the goods. On those facts, the show cause notice issued after substantial delay could not sustain the extended period, and the duty demand, penalty and interest were treated as time-barred.

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Issues: Whether the demand of duty was barred by limitation under section 11A of the Central Excise Act, 1944, in the absence of suppression or wilful withholding of information by the assessee.

Analysis: The demand was founded on the department's audit report and on the agreement between the assessee and the brand owner, both of which showed that the supply of proprietary items such as cutters, moulders and related equipment was within the department's knowledge. The assessee had filed regular RT-12 returns and had also given clarification regarding the nature and use of the items received. On these facts, the record did not support the allegation that the assessee deliberately suppressed information with intent to evade duty. Since the department was aware of the relevant arrangement much earlier, issuance of the show cause notice after a substantial delay could not sustain the extended period of limitation.

Conclusion: The demand was held to be time-barred and the appeal was allowed in favour of the assessee.

Final Conclusion: The duty demand, penalty and interest could not be sustained because the proceedings were initiated beyond limitation on facts not showing suppression with intent to evade.

Ratio Decidendi: Where the department is already aware of the relevant facts and the assessee has not suppressed material information with intent to evade duty, the extended period under section 11A cannot be invoked.

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