Limitation barred the demand where audit and spot memo had already put the department on notice before the show cause notice.

The demand was held time-barred because the department had already conducted an audit, issued a spot memo and received the assessee's reply before issuing the show cause notice, so the material supporting the demand was already within the department's knowledge. On those facts, the extended period of limitation was not available, and the Tribunal followed its earlier view on the same issue. As limitation was dispositive, the Tribunal did not examine the merits of valuation.

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Issues: Whether the demand was barred by limitation and whether the extended period could be invoked when the department had already conducted an audit, issued a spot memo and received a reply before issuing the show cause notice.

Analysis: The dispute was confined to limitation. The record showed that the department had conducted an audit, issued a spot memo and obtained the appellant's reply well before the show cause notice was issued. On those facts, the material forming the basis of the demand was already within the department's knowledge. In such circumstances, the extended period of limitation was not available. The Tribunal followed its earlier view on the same issue and declined to examine the merits of valuation.

Conclusion: The demand was held to be time-barred and the extended period of limitation was held to be inapplicable.

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