Extended limitation in captive consumption demands requires pleaded suppression and proof of manipulated clearances, not mere record discrepancies.

In captive consumption disputes, the extended period of limitation cannot be invoked unless the Revenue pleads and proves suppression, manipulation, or other misstatement of recorded clearances leading to duty evasion. Where statutory records reflect removal, daily stock accounting is maintained, and the notice does not specifically allege the disputed clearances on the relevant dates, limitation may bar the demand. The deeming rule treating goods as removed immediately before consumption does not by itself justify extended limitation without a properly pleaded factual basis. On the stated facts, the demand was treated as time-barred and the department's attempt to rely on the extended period failed.

---

---

Issues: Whether the demand raised in the show cause notice was barred by limitation and whether the extended period of limitation could be invoked in respect of the disputed clearances of ingots cleared for captive consumption.

Analysis: The decisive question was whether the goods were actually removed only on 31-8-1997, as reflected in the statutory records, or whether the later dates of use supported the Revenue's case for invoking the extended period. The relevant rules required daily stock accounting and removal to be reflected in the statutory records, while the deeming provision for captive consumption treated goods as removed immediately before consumption. On the facts, the show cause notice did not contain a specific allegation that the goods had been cleared from the approved place on 1-9-1997, 2-9-1997 and 3-9-1997. The evidence also showed that the assessee had consistently followed a practice of issuing goods for captive consumption in bulk, and the claim that the clearances were made on 31-8-1997 was accepted as a bona fide understanding of the applicable exemption position.

Conclusion: The demand was held to be barred by limitation and the extended period was not available to the department.

Final Conclusion: The Revenue's challenge failed, and the order setting aside the demand was sustained.

Ratio Decidendi: For captive consumption cases, the extended period cannot be invoked unless the Revenue establishes, on the pleaded facts and evidence, that the recorded clearances were a manipulative or suppressed misstatement leading to duty evasion and that the notice properly brings such case within limitation.

---