Contemporaneous departmental knowledge barred extended limitation where factory-posted officers knew imported raw materials were used in manufacture.

Contemporaneous departmental knowledge of imported raw materials being used in manufacture defeated any allegation of suppression, because a Central Excise officer was posted at the factory to supervise removal from the warehouse. The Department could not claim that the same facts were discovered only during investigation merely because it was unaware of the exact clearances of finished goods for domestic consumption. On those facts, the extended period of limitation was not available, as the assessee had not suppressed material facts. The demand for the disputed period was therefore time-barred and the Revenue's appeal failed.

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Issues: Whether the extended period of limitation could be invoked on the allegation that the assessee suppressed the use of imported raw materials in the manufacture of goods cleared in the Domestic Tariff Area.

Analysis: The factory had a Central Excise officer posted for supervising removal of imported raw materials from the warehouse. On those facts, the Department could not deny knowledge of the use of imported materials in manufacture merely because it may not have known the precise clearance of finished goods for home consumption. Once the officer stationed in the factory was aware that imported raw material was being used in the manufacturing process, the Department could not contend that the same fact was discovered only on investigation. The facts did not justify a finding of suppression by the assessee.

Conclusion: The extended period of limitation was not invocable, and the Revenue's appeal failed.

Final Conclusion: The demand for the disputed period could not be sustained on limitation, and the appeal was rejected.

Ratio Decidendi: Where the Department has contemporaneous knowledge of the material facts through its officer posted at the factory, suppression of facts cannot be alleged to invoke the extended period of limitation.

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