Regular disclosure defeats suppression and blocks extended limitation; Cenvat credit reversal on common inputs may be accepted.

Regular disclosure in monthly returns of clearances from common inputs, including goods removed on payment of duty and without payment of duty, negates suppression with intent to evade duty; on those facts, the extended period of limitation cannot be invoked and the demand beyond the normal period is time-barred. The commentary also notes that where common inputs are used for dutiable and exempted by-products, Cenvat credit reversal may be accepted on the assessee's offer to reverse relatable credit, and the Tribunal's factual and remedial directions do not necessarily raise a substantial question of law.

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Issues: (i) Whether the demand of duty could be sustained by invoking suppression of facts and the extended period of limitation. (ii) Whether the assessee was required to maintain separate accounts and reverse a percentage of credit in respect of common inputs used in the manufacture of dutiable and exempted by-products.

Issue (i): Whether the demand of duty could be sustained by invoking suppression of facts and the extended period of limitation.

Analysis: The assessee had been filing regular monthly returns disclosing clearances of goods manufactured from common inputs, both on payment of duty and without payment of duty. The Court noted that the department was aware of this practice and that the claim for duty on the exempted goods was raised later. In these circumstances, the element of suppression with intent to evade duty was not established, and the larger period of limitation could not be applied.

Conclusion: The demand for the period beyond the normal limitation was time-barred and could not be sustained.

Issue (ii): Whether the assessee was required to maintain separate accounts and reverse a percentage of credit in respect of common inputs used in the manufacture of dutiable and exempted by-products.

Analysis: The Court treated the goods in question as by-products arising in the course of manufacture and accepted that the assessee had offered to reverse the entire credit relatable to common inputs for the subsequent period. It also relied on the established approach that Cenvat credit is intended to avoid cascading and that, in the facts of the case, no substantial question of law arose from the Tribunal's directions.

Conclusion: No interference was called for with the Tribunal's order directing acceptance of reversal of the credit, and the Revenue's challenge failed.

Final Conclusion: The appellate challenge was rejected, the Tribunal's order was upheld, and the assessee succeeded on all material issues decided in the case.

Ratio Decidendi: Where common inputs are used and the assessee has regularly disclosed the relevant clearances, suppression with intent to evade duty is not made out, and the extended period of limitation cannot be invoked; in such circumstances, the Tribunal's factual and remedial directions on Cenvat credit reversal do not raise a substantial question of law.

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