Extended limitation and cenvat credit in solar battery manufacture: disclosure negated suppression, and normal-period demand was remitted for recomputation.

Clearances of solar battery disclosed in periodical returns, together with the Department's own parallel proceedings on dutiable and exempted goods, meant the assessee's exemption claim could not be treated as suppression of facts; the extended period of limitation was therefore not invocable and the extended-period demand was set aside. For the normal period, the assessee had already reversed the cenvat credit attributable to inputs and input services, so the demand had to be recomputed after giving effect to the eligible credit position; duty remained payable with interest, but no penalty was warranted. The matter was remitted for recomputation on that basis.

---

---

Issues: (i) Whether the extended period of limitation was invocable for the demand raised in respect of clearances of solar battery; (ii) Whether the assessee was entitled to cenvat credit on inputs and input services used in the manufacture of solar battery for the normal period and whether penalty was leviable.

Issue (i): Whether the extended period of limitation was invocable for the demand raised in respect of clearances of solar battery.

Analysis: The clearances of solar battery were disclosed in the periodical returns filed with the Department. The record also showed that the Department itself had initiated parallel proceedings on the footing that the assessee was manufacturing both dutiable and exempted goods and had not maintained separate accounts. In that situation, the assessee's claim of exemption under Notification No. 6/06 dated 01.03.2006 could not be said to involve suppression of facts.

Conclusion: The extended period of limitation was not invocable and the demand relatable to the extended period was set aside.

Issue (ii): Whether the assessee was entitled to cenvat credit on inputs and input services used in the manufacture of solar battery for the normal period and whether penalty was leviable.

Analysis: Since the assessee had already reversed the cenvat credit attributable to inputs and input services used for the manufacture of solar battery, the demand for the normal period had to be worked out after giving effect to the admissible credit position for that period. On the same footing, once the dispute was confined to recomputation for the normal period, penalty was not warranted.

Conclusion: The assessee was entitled to the benefit of cenvat credit for the normal period, duty was payable with interest, and no penalty was imposable.

Final Conclusion: The matter was remitted to the adjudicating authority for recomputation of the demand for the normal period after allowing the eligible cenvat credit, with interest, while denying penalty.

---