Extended limitation for suppression fails where earlier notice disclosed the facts, making the excise demand time barred.

The extended limitation period under the proviso to Section 11A of the Central Excise Act, 1944 was not available because the Department had already issued an earlier show cause notice disclosing the same manufacturing process and facts without alleging suppression. On that record, the later notice could not plausibly rely on ignorance of the activity or on wilful suppression to enlarge the limitation period. As the demand was raised beyond the normal six-month period, it was time barred. With the foundation for penalty equally absent, no penalty could be sustained against the assessee.

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Issues: Whether the extended period of limitation under the proviso to Section 11A of the Central Excise Act, 1944 could be invoked on the allegation of suppression of facts, and whether the demand and penalty were sustainable.

Analysis: The Department had already issued an earlier show cause notice on the same manufacturing process of flavoured chewing tobacco used captively in the manufacture of gutkha, and that notice itself disclosed the relevant facts without alleging suppression. In that background, the later notice could not validly rest on a claim that the manufacturing activity was outside the Department's knowledge. The record therefore did not support wilful suppression or any other ground justifying the enlarged limitation period. Once the extended period failed, the demand raised beyond six months became time barred. As the same foundation for penalty also disappeared, no penalty could survive.

Conclusion: The invocation of the extended period was invalid, the demand was time barred, and the penalty was unsustainable, all in favour of the assessee.

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