Revenue neutrality and Modvat credit defeated extended limitation; duty demand was held time-barred for lack of suppression.

Duty demand arising from clearances between a taxpayer's own units was held time-barred because the duty paid at the originating factory would have been available as Modvat credit at the consuming factory, making the situation revenue neutral. On those facts, there was no intention to evade duty, so the allegation of suppression could not justify invocation of the extended limitation period. The demand was therefore barred by limitation, and the appeals were allowed without examining the merits of the duty demand.

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Issues: Whether the duty demand was barred by limitation in view of revenue neutrality and the availability of Modvat credit, so as to preclude invocation of the extended period on the basis of suppression.

Analysis: The clearances were between the appellant's own units and the duty payable at the originating factory would have been available as Modvat credit for use at the consuming factory. On these facts, there was no intention to evade duty, and the allegation of suppression could not sustain invocation of the extended limitation period. The demand was therefore held to be time-barred.

Conclusion: The demand was barred by limitation and the appeals were allowed, without examination of the merits of the duty demand.

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