Modvat credit limitation: full disclosure in records bars extended demand absent new material or proven suppression.

Modvat credit demand was held time-barred because the assessee had disclosed the capital goods, invoice, purchase order and classification particulars in its declaration, and the same details were available in contemporaneous records. When any doubt remained about the function or coverage of the goods, the department could have sought further particulars; it could not invoke the longer limitation period after about two years on the same material without new facts. An unsupported allegation of suppression or misstatement was insufficient to justify extended limitation. The impugned orders were set aside and relief followed.

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Issues: Whether the demand of Modvat credit was barred by limitation under Rule 57U of the Central Excise Rules, 1944.

Analysis: The declaration filed by the assessee disclosed the capital goods, the invoice, the purchase order, and the classification particulars. The same description also appeared in the supplier's invoice and the records had been made available to the excise authorities. In such circumstances, if any doubt existed about the function or coverage of the goods, it was open to the department to seek further particulars. A demand raised after about two years on the same set of documents, without any new material coming to light, did not justify invocation of the longer limitation period. The allegation of insufficient or misleading disclosure was not supported by any reasoned finding.

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

Final Conclusion: The impugned orders were set aside and the appeal was allowed with consequential relief.

Ratio Decidendi: Where the relevant facts are fully disclosed in the assessee's declaration and contemporaneous records, the extended period of limitation cannot be invoked merely on a later allegation of suppression or misstatement without new material.

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