Extended limitation fails where returned goods were fully disclosed and suppression of material facts was not established.

Returned duty-paid goods were disclosed to the department through D-3 declarations as goods for remixing and repacking, and the reprocessing activity, nil-duty clearances, and RT 12 finalisation were all within departmental knowledge. On those facts, suppression of material facts was not established, so the extended limitation period could not be invoked. The show cause notice was therefore time-barred, and the resulting demand and penalty could not be sustained.

---

---

Issues: Whether the show cause notice was barred by limitation on account of absence of suppression of material facts.

Analysis: The returned duty-paid goods were declared to the department through D-3 declarations as goods meant for remixing and repacking. The reprocessing activity, the subsequent clearances under nil-duty gate passes, and the finalisation of RT 12 returns were all within the department's knowledge. If the department later formed the view that the process amounted to manufacture and that Rule 173H was unavailable, that issue ought to have been examined at the stage of receipt of the declaration or at the time of clearance. On these facts, suppression of material facts was not established, and the invocation of the extended period could not stand.

Conclusion: The notice was time-barred and the demand and penalty could not be sustained.

---