Extended limitation in excise cannot be invoked where department already knew the material facts and prior notice failed

Excise duty demand on forwarding and freight charges was held time barred because the extended limitation period could not be invoked without wilful suppression of facts. The authorities were already aware of the relevant clearances and value declarations, and an earlier identical demand against the same assessee had already been set aside on limitation. On the same or similar facts, a later notice could not rely on suppression to extend the period under Section 11A of the Central Excise Act, 1944. The demand was therefore unsustainable on limitation, without examining includibility of freight in assessable value.

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Issues: Whether the demand of excise duty on forwarding and freight charges was barred by limitation by reason of absence of suppression of facts so as to justify invocation of the extended period.

Analysis: The dispute was decided on limitation alone, without entering the merits of includibility of freight in assessable value. The same assessee had earlier faced an identical issue and the demand for the earlier period had already been set aside on limitation. The subsequent notice was issued on the same or similar facts, and the authorities were already aware of the relevant clearances and value declarations. In these circumstances, the extended period under Section 11A of the Central Excise Act, 1944 could not be invoked, as there was no wilful suppression of facts.

Conclusion: The demand was time barred and the invocation of the extended period was held unsustainable.

Ratio Decidendi: Where the department already knew the material facts and has earlier proceeded on the same or similar issue, invocation of the extended period for a later notice on the plea of suppression is not permissible.

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