Extended limitation cannot apply when facts were already known, and duty demand fails after the disputed practice was discontinued.

Where the department was already aware of the relevant practice and the unit remained under physical control, the extended period of limitation could not be invoked for the earlier period because suppression was not established. The duty demand for January 2007 to 23.4.2009 was therefore time-barred. For the later period from 24.4.2009 to October 2011, the assessee had informed the department that the practice had stopped, so the demand rested only on presumption and not on an existing activity. The demand for that period was accordingly not sustainable, and the impugned order was set aside with consequential relief.

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Issues: (i) whether the duty demand was sustainable for the period 24.4.2009 to October 2011 after the assessee discontinued the impugned practice; (ii) whether the demand for the period January 2007 to 23.4.2009 was barred by limitation by reason of invocation of the extended period.

Issue (i): whether the duty demand was sustainable for the period 24.4.2009 to October 2011 after the assessee discontinued the impugned practice.

Analysis: The records showed that the assessee had intimated the department on 24.4.2009 that the practice had been stopped. The demand for the later period was thus based only on presumption and not on an existing activity during that period.

Conclusion: The demand for the period 24.4.2009 to October 2011 was not sustainable.

Issue (ii): whether the demand for the period January 2007 to 23.4.2009 was barred by limitation by reason of invocation of the extended period.

Analysis: The unit was under physical control of the Central Excise Department, and the department was informed of the practice. In these circumstances, invocation of the extended period was not justified.

Conclusion: The demand for the period January 2007 to 23.4.2009 was barred by limitation.

Final Conclusion: The impugned order was set aside and the appeals were allowed with consequential relief.

Ratio Decidendi: Where the department is already aware of the relevant facts, the extended period of limitation cannot be invoked, and a duty demand cannot survive for a period after the underlying practice has been discontinued and is unsupported by evidence.

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