Limitation for duty demand fails where records were disclosed and no suppression or intent to evade was proved.

The extended limitation period could not be invoked for reversal of deemed credit because the department failed to establish suppression of facts or wilful misstatement with intent to evade duty. The assessee had filed the required declaration, maintained accounts and reflected stock particulars in its records, and the department relied on those same records to allege excess credit. As the relevant material was already available from the assessee's own documents and no independent basis for alleging evasion was shown, limitation was decided in favour of the assessee and the demand, including penalty, was set aside without examination of merits.

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Issues: Whether the demand for reversal of deemed credit and the consequential penalty were barred by limitation on the ground that the department had not established suppression of facts or wilful misstatement with intent to evade duty.

Analysis: The demand related to March 2003, while the show cause notice was issued nearly four years later. The adjudicating record showed that the assessee had filed the declaration, maintained accounts and reflected the relevant stock particulars in its records, and the department relied on those very records to allege excess credit. In these circumstances, the essential ingredients for invoking the extended period were not established, because the material necessary to detect the alleged discrepancy was already available from the assessee's own documents and no independent basis was shown for alleging suppression with intent to evade.

Conclusion: The issue of limitation was decided in favour of the assessee, the extended period was held not invocable, and the demand was set aside without entering into the merits.

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