Extended limitation fails when facts are already disclosed, and consequential penalty, interest and confiscation cannot survive.

Where the department already knew the material facts from declarations on record, invocation of the extended limitation period was not justified and the demand was held time-barred. On that basis, the connected penalty, interest and confiscation could not survive and were set aside in favour of the assessee. The stated principle is that knowledge of the relevant facts by the department defeats the proviso for extended limitation, and consequential penal and confiscatory proceedings fall with the underlying demand.

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Issues: Whether the demand was barred by limitation and, if so, whether the penalty, interest and confiscation could survive.

Analysis: The demand was founded on the extended period, but the relevant facts regarding the exempt final products and the job-work arrangement were already known to the department through the declarations on record. On those facts, the invocation of the proviso to the limitation provision was not justified. Once the demand itself was held to be time-barred, the penalty under the penalty provision, the interest demand and the confiscation order could not be sustained.

Conclusion: The demand was held to be barred by limitation and the connected penalty, interest and confiscation were set aside, in favour of the assessee.

Ratio Decidendi: Where the department is already aware of the material facts and no valid ground exists for invoking the extended period, the duty demand is time-barred and the consequential penalty and confiscation cannot be sustained.

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