Selective denial of condonation for belated declarations cannot sustain the full reversal demand; only the unsupported period stands.

Belated declarations for capital goods under Rule 57T were partly condoned and partly refused without reasons, so selective denial of condonation could not support the full reversal demand. The assessee was entitled to contest the consequential demand even without appealing the earlier order, because the demand depended on the validity of the refusal of condonation. The demand was sustainable only for the period where condonation was not available on the facts, and the balance was unsustainable.

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Issues: Whether the denial of condonation of delay in filing declarations under Rule 57T could be questioned at the stage of demand for reversal of credit, and whether the demand was sustainable only to the extent relating to the period for which condonation was validly refused.

Analysis: The declarations for capital goods had been filed belatedly and the Assistant Commissioner had condoned the delay in some cases while refusing it for others, without assigning reasons for the differential treatment. The absence of an appeal against the earlier order did not prevent the assessee from contesting the consequential demand when the department sought to recover credit based on the refusal of condonation. Since the same grounds were shown for all the lots, the selective denial of condonation was found to be unsupported.

Conclusion: The demand could be upheld only for the period where condonation was not available on the facts, and the remaining demand was unsustainable.

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