Extended limitation for excise demand fails where facts were already known to both sides and suppression was not deliberate.

Extended limitation under the proviso to Section 11A(1) of the Central Excise Act was unavailable where the department already knew of the assessee's draw warping activity and had required registration. The assessee had disclosed the activity and claimed exemption, so non-payment of duty and related non-compliance could not be treated as deliberate, wilful suppression with intent to evade duty. Suppression must be proven as intentional and fraud-like; where both sides knew the relevant facts, the extended period does not apply. The duty demand, interest and penalty could not be sustained on that basis, and the Revenue's appeal failed.

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Issues: Whether the Revenue could invoke the extended period of limitation under the proviso to Section 11A(1) of the Central Excise Act, 1944 on the ground of wilful suppression, fraud or misstatement so as to sustain the duty demand, interest and penalty.

Analysis: The department was aware of the draw warping activity and had even required registration. The assessee had disclosed its activity and had taken a stand that the process was covered by the exemption notifications. In such circumstances, the omission to pay duty or to comply with further formalities could not be treated as deliberate suppression with intent to evade duty. The settled principle applied was that suppression of facts must be deliberate and wilful, and where the relevant facts are known to both sides, extended limitation is not attracted.

Conclusion: The extended period of limitation was not available to the Revenue and the demand could not be sustained on that basis.

Final Conclusion: The appeal failed because the question of limitation was answered against the Revenue, leaving the Tribunal's order undisturbed.

Ratio Decidendi: Extended limitation under the proviso to Section 11A(1) can be invoked only on proof of deliberate and wilful suppression, fraud or misstatement to evade duty, and not where the department was already aware of the relevant facts.

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