Limitation and Modvat credit on leased capital goods failed where no suppression was found and the extended period was unavailable.

Leased capital goods credit could not be disallowed where the dispute was already treated as one of interpretation and no fraud, wilful misstatement or suppression was found, making the extended limitation period unavailable. The Tribunal also noted that the notice issued beyond the normal period could not sustain the demand, especially where duty-paying documents showed the goods were taken on lease. A mere change in the revenue's interpretation was insufficient to invoke the longer limitation, and the substituted Modvat-related rules and relied-upon notification did not support continuation of the disallowance proceedings. The Tribunal therefore followed its earlier decision in the same matter and rejected the revenue's challenge.

---

---

Issues: Whether the revenue could sustain disallowance of credit on leased capital goods and the resulting demand when the earlier Tribunal decision had held the notice to be barred by limitation and the proceedings unsustainable on merits.

Analysis: The Tribunal noted that in the respondents' own case arising from the same order-in-original, the coordinate Bench had held that the adjudicating authority itself treated the dispute as one of interpretation, found no fraud, wilful misstatement or suppression, and therefore the extended period was unavailable. It was further held that the notice issued beyond the normal period could not sustain disallowance of credit, particularly when the duty-paying documents indicated that the goods were on lease, and that a change in the revenue's interpretation could not justify invocation of the longer period. The earlier decision had also accepted that the substituted Modvat-related rules and the notification relied upon did not permit continuation of the disallowance proceedings in the manner attempted.

Conclusion: The Tribunal followed its earlier decision in the respondents' own matter and held that the impugned order did not survive, resulting in dismissal of the revenue's appeal.

---