Limitation for duty demand: prior disclosure of molasses storage barred extended period for alleged suppression.

Duty demand on molasses stored in kutcha pits was held to be time-barred because the notice was issued after six months from the relevant dates. The assessee had disclosed the storage practice to the department through letters and returns and had sought permission due to shortage of storage space, so the department already knew the material facts. On that basis, no suppression or misstatement was established, and the extended limitation period could not be invoked. The demand therefore failed on limitation, with the conclusion favouring the assessee.

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Issues: Whether the demand of duty on molasses stored in kutcha pits was barred by limitation and whether the extended period could be invoked on the basis of suppression or misstatement of facts.

Analysis: The notice demanding duty was issued after the expiry of six months from the relevant dates, whether counted from the date of storage in the kutcha pits or from the date on which permission to store was withdrawn. The assessee had earlier informed the department by letters and returns that molasses were being stored in kutcha pits and had sought permission because of shortage of storage space. The department therefore had full knowledge of the material facts, and no suppression or misstatement could be attributed to the assessee. In the absence of concealment, the extended limitation period was not available.

Conclusion: The demand was time-barred and the invocation of the extended period was not justified. The finding is in favour of the assessee.

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