Extended limitation cannot be invoked where Modvat credit facts were fully disclosed through declarations, returns and correspondence.

Complete disclosure through declarations, Modvat returns and correspondence with the department prevented invocation of the extended limitation period for reversal of credit on capital goods. The record showed that the assessee had regularly furnished the relevant facts, including the credit now disputed, and the department had sufficient knowledge to initiate proceedings within the normal period. In the absence of suppression of facts, the show cause notice was time-barred and the demand could not be sustained.

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Issues: Whether the show cause notice demanding reversal of Modvat credit on capital goods was barred by limitation on account of absence of suppression of facts.

Analysis: The appellant had filed declarations under Rule 57T(1) and regularly submitted Modvat records and returns to the department. The record also showed repeated correspondence with the department and audit authorities regarding the very credit now disputed. On these facts, the availment of credit on the capital goods was held to have been fully disclosed, and the department had sufficient knowledge to issue proceedings within the normal period. As there was no suppression of facts, the extended period could not be invoked.

Conclusion: The show cause notice was time-barred and the demand could not be sustained; the appeal succeeded on limitation.

Ratio Decidendi: When the assessee has made complete disclosure of the relevant facts to the department through declarations, returns, and correspondence, the extended period of limitation cannot be invoked in the absence of suppression of facts.

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