Extended limitation barred where the department already knew the facts and had earlier issued notices on the same issue

Extended limitation could not be invoked where the department had long known of the scrap clearance issue, had repeatedly corresponded with the assessee, and had already issued earlier show cause notices on the same facts. The subsequent notice was issued while remand proceedings were still pending, but the matter had already been under departmental consideration for years. On those facts, the Tribunal held that the notice and resulting demand were barred by limitation, and the extended period was unavailable because the same factual foundation had already been examined by the department. The issue was decided in favour of the assessee.

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Issues: Whether the show cause notice and the impugned demand were barred by limitation and whether the extended period could be invoked in the subsequent proceedings.

Analysis: The issue of clearance of scrap had been within the department's knowledge since 1999, and the record showed repeated correspondence between the departmental officers and the assessee. Earlier show cause notices had already been issued in the interregnum and the proceedings arising therefrom had travelled through appellate stages. The impugned notice was issued during the pendency of the remand proceedings, even though the matter was already under departmental consideration. In these circumstances, invocation of the extended period was held to be impermissible. The Tribunal relied on the principle that, where the department is already aware of the facts and has taken earlier action, a subsequent notice cannot validly invoke the extended period on the same foundation.

Conclusion: The show cause notice was barred by limitation and the extended period could not be invoked. The issue was decided in favour of the assessee.

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