Judgment V.M. Sahai, J. 1. We have heard Mr. Gaurang H. Bhatt, learned Central Government Standing Counsel appearing for the department and Mr. Mihir Joshi, learned Senior Counsel assisted by Mr. Dhaval Shah appearing for the respondents. This Tax Appeal was admitted on the following substantial questions of law:-- "(1) Whether or not period of five years provided under proviso to section 11A(i) can bar the demand of Central Excise duty when the clearance are affected by reason of wilful misstatement and suppression of facts and in contravention of the provisions of the Act and Rules? (2) Whether the CESTAT is empowered not to impose penalty under Rule 173-Q of Central Excise Rules, 1944 on the assessee who evaded Central Excise duty by suppression of facts and in contravention of Rules under Central Excise Law?" 2. The brief facts are that the respondent is the processor of man made fabrics. On 16.9.1996, the Officers of Central Excise visited the godown-cum-business premises of the respondent. The Officers allegedly recovered the register alleged to have been maintained by one Shri S.D. Tiwari containing the details of lotwise receipts of processed man made fabrics received from the respondent's factory and number of sarees obtained after cutting and packing against respective lot numbers shown in the register. The Officers also allegedly recovered computerized datewise receipts from Shri S.U. Sharma, General Manager of P.F. The Show-cause notice dated 27.3.2001 was issued asking the respondent to pay duty of Rs. 25,76,598/- on account of illicit removal. Excise duty of Rs. 1,60,77,291/- on the differential value of man made fabrics processed cleared by them undervaluing the same and asking to impose the penalty, interest etc. The matter was adjudicated by the Commissioner and consequent to the adjudication order, the duty of Rs. 25,76,598/- was confirmed on alleged illicit removal invoking the extended period for the reason of suppression of facts and wilful misstatements. As regards the demand of Central Excise duty of Rs. 1,60,77,219/-, the Commissioner in paragraph 39 of the impugned order has stated that "As the issue has been settled by CEGAT finally in favour of notices, there is no point in proceeding with this aspect of this show cause notice." The demand for the aforesaid amount was dropped by the Commissioner and no appeal was filed against this order. 3. 1,60,77,219/-, the Commissioner in paragraph 39 of the impugned order has stated that "As the issue has been settled by CEGAT finally in favour of notices, there is no point in proceeding with this aspect of this show cause notice." The demand for the aforesaid amount was dropped by the Commissioner and no appeal was filed against this order. 3. Being aggrieved by the order dated 11.1.2002 passed by the Commissioner of Central Excise & Customs, Surat-I, the respondent herein preferred Appeal before the Customs, Excise and Service Tax Appellate Tribunal, West Regional Bench at Mumbai which came to be allowed by the judgment and order dated 20.12.2005 and the order passed by the Commissioner dated 11.1.2002 was quashed and set aside. 4. Mr. Gaurang H. Bhatt, learned Central Government Standing Counsel appearing for the department has urged that in view of Section 11A of the Central Excise Act, 1944, as it stood at the relevant time, the period of issuing show-cause notice from 16.9.1996 was six months and in view of the proviso contained to the section, if any suppression of material facts of fraud was detected, then extended period of limitation of five years was available to the department and the impugned show-cause notice dated 27.3.2001 was within a period of five years from 16.9.1996 and the entire proceedings were legal and within the time limit prescribed by the Act. The Commissioner has recorded a finding that the show-cause notice was issued within a period of five years and was a valid show-cause notice and being satisfied that there is an evasion of excise duty, the Commissioner levied excise duty as well as penalty by giving cogent reasons. The order of the Commissioner was challenged by the respondent before the CESTAT which allowed the appeal by judgment and order dated 20.12.2005 holding that the show-cause notice was hopelessly time barred. 5. Mr. Bhatt further urged that the view taken by CESTAT was not correct as after taking statements and examining documents, show-cause notice was issued on 27.3.2001 which was well within a period of five years and was a legal show-cause notice and the view taken by the Tribunal that the show-cause notice was barred and could not be issued beyond a period of six months i.e. to say after 15.3.1997 is not correct. 6. Mr. Mihir Joshi, learned Senior Counsel assisted by Mr. 6. Mr. Mihir Joshi, learned Senior Counsel assisted by Mr. Dhaval Shah appearing for the respondent, inter alia, at the outset contended that since the demand of Rs. 1,60,77,219/- related to the period 1995-96 and 1996-97 and, therefore, the show-cause notice was issued dated 20.4.1998, whereas in the present case, the period relates to 24.6.96 to 13.9.96 and the show-cause notice has been issued dated 27.3.2001. The demand is hopelessly time barred, because the full facts were in the knowledge of the Department when the show-cause notice dated 20.4.1998 was adjudicated upon and the period in the present appeal is very well covered in the show-cause notice dated 20.4.1998. Therefore, the question of invoking the extended period does not arise in the matter. He submitted that the extended period cannot be invoked; that no evidence has been brought on record to prove the charge of illicit removal; all records of inward and outward processed fabrics in Parag House have been maintained by the Accounts Department of the Company's inward details of grey fabrics and outward details of processed fabrics has been maintained by the Company, Parag Industries Limited; that no authenticity of alleged record register has been proved by the Department and that the so-called register was maintained by the Contractor and the respondent has no concern with the same and the Contractor was entrusted in making the entries therein through the labourers employed by him. The entries made by the labourers in the register cannot be called to be sufficient to establish clandestine removal. 7. Having heard learned counsel appearing for the parties, we are of the view that it is not disputed that the inspection was carried out by the Officers of the appellants on 16.9.1996. The first show-cause notice was issued on 14.3.1997 and the second show-cause notice was issued on 20.4.1998 and the third show-cause notice was issued on 27.3.2001. It is true that the show-cause notices were issued with regard to part of the transactions for different periods, but on the basis of the same inspection made on 16.9.1996. Once the earlier show cause notices were issued with regard to the same inspection, then the averment of the department cannot be accepted that they have discovered suppression, fraud etc. subsequently. Everything was within the knowledge of the department from the date of inspection and from the Panchnama made by them on 16.9.1996. Once the earlier show cause notices were issued with regard to the same inspection, then the averment of the department cannot be accepted that they have discovered suppression, fraud etc. subsequently. Everything was within the knowledge of the department from the date of inspection and from the Panchnama made by them on 16.9.1996. Therefore, in view of the peculiar facts and circumstances of the case, the extended period of five years was not available to the department. 8. The findings recorded by CESTAT in paragraphs 12 and 13 is extracted below:-- "12. The earlier appeal filed by the appellants before Hon'ble CAGAT reported in Parag Industries (P.) Ltd. v. CCE, Swraf-7, 2000 (121) ELT 540 (T-WZB), which has been decided in favour of the appellants also stands in the way of the Department invoking the extended period of limitation, particularly when the Department has not filed any appeal against the said order. Besides, the fact of the settlement in the KVSS, as per the certificate dated 23.3.1999 as at page No. 164 mentioned above, also stand in the way of Department to invoke the extended period. The learned counsel specifically drew our attention to para 28 of the impugned order wherein the Commissioner has recorded as under:-- "On the basis of the details, the officers verified the lot register of Parag Industries Ltd. and on the comparison of the entries lot price-wise with each other, it was noticed that most of the lot entries, the fabrics of which to have been shown as receipt at Parag House were found pending in the factory premises of PIL (processed house)." 13. We have carefully heard both the sides. Considering the submissions made by both the sides, perusal of the records and the case laws relied by the learned counsel, we find that when the Officers had visited the factory premises on 28.9.96 for follow-up action and have been drawn factual panchnama on 20-21.9.96, detained certain goods on 21.9.96 recorded the statement during the period 16-17/9.96 to 12.12.96, the show-cause notice dt.14.3.97 culminated in the order of the Tribunal reported in 2000 (121) ELT 540 (T) and the prosecution of the case was settled on 23.3.99 as at page 164 of show-cause notice on 27.3.2001 for the period in dispute (i.e. 24.6.1996 to 13.9.96) must be on the expire of six months; Le. the show-cause notice should have been issued latest by 15.3.1997. the show-cause notice should have been issued latest by 15.3.1997. Hence, the demand is hopelessly time barred. Therefore, even without going into further merits of the case, we can hold that the demand is barred by limitation. However, it would be pertinent to mention that so far as undervaluation is concerned, it has already been mentioned that the duty was paid as per the Trade Notice issued by the Surat Commissioner, which was based on the CBEC order dated 31.12.1993. The learned counsel has already submitted that imposition of penalty is totally illegal as no specific clause of Rule 173-Q(1) of CER of 1994 has been mentioned. We fully agree with the contention of the learned counsel that in the absence of the specific contravention, imposition of penalty is totally vague and not sustainable. We, therefore, set aside the impugned order and allow the appeals filed by the appellants." 9. Further, the Hon'ble Apex Court in Nizam Sugar Factory v. Collector of Central Excise 2006 (197) ELT 465 has held that where all relevant facts were not in the knowledge of the authorities when the first show-cause notice was issued, while issuing second and third show-cause notices to the assessee on the same and similar facts could not be taken as suppression of facts on the part of the assessee as the facts were already within the knowledge of the authorities. Therefore, we are unable to accept the submission of Mr. Gaurang Bhatt that the department had no knowledge about the suppression of facts on the part of assessee-respondent or when the first or second show-cause notice was issued by the department. In all the three show-cause notices, the allegations are more or less same based on same factual aspects. 10. In view of the facts of this case, we answer the question No. 1 against the department and in favour of the assessee and held that the extended period of five years would not be available to the department under section 11A(f) of the Central Excise Act in the facts of the case. So far as question No. 2 is concerned, since the entire proceedings is time barred, excise duty cannot be levied against the assessee. So far as question No. 2 is concerned, since the entire proceedings is time barred, excise duty cannot be levied against the assessee. Therefore, penalty under Rule 173-Q could not be levied on the assessee on the ground that he has evaded central excise duty by suppression of facts and in contravention of Rules under the Central Excise Rules. For the aforesaid reasons, both the questions are answered against the department and in favour of the assessee. The appeal is accordingly dismissed. In favour of Assessee.