Extended limitation unavailable without suppression when manufacturing activity was disclosed and the department already knew the relevant facts.

Extended limitation could not be invoked where the assessee had disclosed its manufacturing activity from inception, filed declarations, and sought excise advice, while the department had already visited the factory, drawn samples, and obtained the chemical examiner's report before issuing notice. On those facts, there was no suppression of material facts or wilful misstatement, so the demand issued after departmental knowledge of the relevant facts was time-barred. The assessee therefore succeeded on limitation.

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Issues: Whether the demand was barred by limitation in the absence of suppression or misdeclaration.

Analysis: The record showed that the assessees had been corresponding with the department from the inception of manufacture, had filed declarations and obtained advice from excise , and had later obtained a licence when the exemption limit was expected to be crossed. The department had also visited the factory, drawn samples, and obtained the chemical examiner's report well before issuing the show cause notice. On these facts, there was no concealment of material facts or wilful misstatement, and the extended period could not be invoked. The demand, issued long after the department had knowledge of the relevant facts, was time-barred.

Conclusion: The demand was held to be barred by limitation and the assessee succeeded.

Ratio Decidendi: Where the assessee had disclosed the manufacturing activity and the department had knowledge of the relevant facts, absence of suppression or misdeclaration precludes invocation of the extended period of limitation.

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