Extended limitation fails where prior departmental disclosure negates suppression, invalidating the central excise duty demand and penalty.

Extended limitation for central excise duty could not be invoked where the Department had prior correspondence disclosing the assessee's proposed procurement and packing/labelling activities relating to crankshafts. The Department could not claim ignorance of material facts after several years, particularly when the show-cause notice was issued beyond the normal limitation period despite a direction to issue a proper recovery notice. As the lower orders did not address these circumstances, the extended period lacked justification. The duty demand and consequential penalty therefore could not survive.

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Issues: Whether the extended period of limitation for demanding central excise duty could validly be invoked.

Analysis: The Department had been informed through prior correspondence of the assessee's intended procurement and packing/labelling activities in respect of crankshafts. It could not, after three years, claim ignorance of those material facts. Further, despite the direction to issue a proper recovery notice, the show-cause notice was issued beyond one year, and the lower orders did not address these facts. The extended period was therefore invoked without justification.

Conclusion: Invocation of the extended period of limitation was legally unsustainable; consequently, the duty demand and consequential penalty could not survive.

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