Second show cause notice on settled facts barred; extended limitation failed without fresh material or proven suppression.

A second show cause notice on the same settled facts and overlapping period was held unsustainable after an earlier speaking order had dropped the first notice and attained finality. The principle of consistency barred reopening the issue in the absence of fresh material. The extended period of limitation also could not be invoked because the facts relating to manufacture, scrap generation, and duty payment were already known to the department; a bare allegation of wilful suppression was insufficient. As a result, the connected demand, penalty, and interest could not survive, while the questions on reversal of credit and removal of waste and scrap were left open.

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Issues: (i) Whether a second show cause notice on the same subject matter and overlapping period could be issued after an earlier notice had been dropped by a speaking order that attained finality. (ii) Whether the extended period of limitation could be invoked on the basis of suppression or wilful misstatement in the facts of the case.

Issue (i): Whether a second show cause notice on the same subject matter and overlapping period could be issued after an earlier notice had been dropped by a speaking order that attained finality.

Analysis: The earlier adjudication had examined the very same transactions, accepted the assessee's explanation, and dropped the proceedings by a reasoned order. The later notice was found to be an exact replica of the earlier notice except for the period and demand amount, and part of the later period overlapped with the period already covered by the final earlier adjudication. In these circumstances, the principle of consistency applied, and the department could not reopen the settled issue in the absence of any fresh material.

Conclusion: The second notice and the proceedings founded on it were not sustainable against the assessee.

Issue (ii): Whether the extended period of limitation could be invoked on the basis of suppression or wilful misstatement in the facts of the case.

Analysis: The relevant facts regarding the manufacture, generation of scrap, and payment of duty were already within the knowledge of the department when the first notice was issued and adjudicated. Once the earlier notice on the same issue had been dropped, the same facts could not later be characterised as suppression. Mere use of the expression "wilfully suppressed" without supporting material was insufficient to sustain invocation of the extended period, and consequently the connected demand, penalty, and interest also could not survive.

Conclusion: The extended period of limitation was not available against the assessee.

Final Conclusion: The appeal failed, and the order of the Tribunal granting relief to the assessee was sustained. The questions relating to reversal of credit and permission for removal of waste and scrap were left open.

Ratio Decidendi: A second show cause notice on the same settled facts, especially after an earlier notice has been dropped by a final speaking order, cannot sustain invocation of the extended limitation period in the absence of fresh material showing suppression or wilful misstatement.

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