Limitation and suppression of facts defeated duty demand where declarations, invoices, visits, and audit showed departmental knowledge.

Demand of duty and penalty were held time-barred because the department could not establish suppression of facts to justify the extended limitation period. The assessee had filed classification declarations, cleared goods under invoices describing the product, and the unit had been visited by departmental officers and audited, all of which supported departmental knowledge of the manufacturing activity. In these circumstances, the extended period was not available, and the demand and consequential penalty could not be sustained on limitation grounds.

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Issues: Whether the demand of duty and the consequential penalty were barred by limitation in the absence of suppression of facts so as to justify invocation of the extended period.

Analysis: The product classification dispute had already been resolved against the assessee, but the operative question was whether the demand could still be sustained within limitation. The records showed that the assessee had filed classification declarations under Rule 173B of the Central Excise Rules, 1944, the goods were cleared under invoices describing the product, the departmental officers had visited the unit, and audit had also been conducted. On these facts, the finding that the department had knowledge of the manufacturing activity was accepted, and the basis for alleging suppression of facts was not made out.

Conclusion: The demand and penalty were barred by limitation, and invocation of the extended period was not justified; the finding was in favour of the assessee.

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