Extended limitation for duty demand failed where department already knew of the storage steel tank manufacture and approval.

Extended limitation for a duty demand was held unsustainable because the manufacturer had informed the department about the storage steel tank, sought approval of the plant, and the Superintendent approved it; regular inspections by the Central Excise Inspector also showed departmental knowledge of the facts. On that record, the tank could not be said to have escaped notice, so a notice issued in 1989 for goods manufactured in 1985 fell beyond the permissible extended period. The duty demand therefore failed on limitation, without any need to decide whether the steel tank was immovable property.

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Issues: Whether the extended period of limitation could be invoked for the duty demand in respect of the storage steel tank manufactured in 1985.

Analysis: The appellants had informed the department by letter about the manufacture of the storage steel tank and sought approval of the plant, which was granted by the Superintendent. The record also showed regular visits by the Central Excise Inspector for stock checking. In these circumstances, the tank could not have escaped departmental notice, and the facts relevant to the demand were already within the knowledge of the department. Without going into the question whether the steel tank constituted an immovable property, the notice issued in 1989 for a product manufactured in 1985 was held to be beyond the permissible extended period.

Conclusion: The invocation of the extended period was unsustainable and the duty demand could not be sustained on limitation.

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