Modvat credit on capital goods upheld where fabrication inputs were disclosed and no suppression justified extended limitation.

Goods used in the fabrication, erection and installation of a Cold Rolling Mill were treated as capital goods because they were declared in advance, reflected in RT-12 returns, and found on the facts to form part of the installed capital goods used in manufacture. Modvat credit under Rule 57Q was therefore admissible. The extended period of limitation could not be invoked because the credit was taken after disclosure of the relevant facts, and the show cause notice was issued later without any suppression of material facts. The demand was thus time-barred, and no substantial question of law arose for interference.

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Issues: (i) Whether the inputs used in the fabrication, erection and installation of a Cold Rolling Mill could be treated as capital goods for Modvat credit under Rule 57Q of the Central Excise Rules, 1944; (ii) Whether the extended period of limitation could be invoked on the allegation of suppression of facts.

Issue (i): Whether the inputs used in the fabrication, erection and installation of a Cold Rolling Mill could be treated as capital goods for Modvat credit under Rule 57Q of the Central Excise Rules, 1944.

Analysis: The goods were declared as parts of capital goods and credit was availed after filing the declaration and RT-12 returns. The factual findings accepted by the adjudicating authority and affirmed in appeal were that the goods formed part of the capital goods installed in the factory and were used in relation to manufacture of the final products. No material was shown to dislodge those findings.

Conclusion: The goods were rightly treated as capital goods and Modvat credit was admissible.

Issue (ii): Whether the extended period of limitation could be invoked on the allegation of suppression of facts.

Analysis: The credit had been taken in 1998 after disclosure in the declaration and returns, while the show cause notice was issued only on 12-3-2001. On those facts, there was no suppression of material facts and the statutory conditions for applying the extended period were absent.

Conclusion: The extended period of limitation was not invocable and the demand was time-barred.

Final Conclusion: The appeal failed because the credit was held admissible and the demand was also barred by limitation, leaving no substantial question of law for interference.

Ratio Decidendi: Where the assessee has disclosed the relevant facts by declaration and returns, and the disputed goods are found on facts to be part of capital goods used in the factory, Modvat credit cannot be denied and the extended period of limitation cannot be invoked absent suppression of facts.

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