Revenue-neutral clearances defeat extended limitation where intent to evade duty is not established under central excise law.

Revenue-neutral clearances to an assessee's own unit did not support invocation of the extended limitation period under central excise law. Because the duty paid on clearances to the granulation unit was available as Modvat credit in that unit, the omission to adopt the correct value for each grade of goods did not, by itself, establish an intent to evade duty. In the absence of proven intent to evade, the longer limitation period could not be applied, and the demand raised beyond the normal period was unsustainable.

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Issues: Whether the extended period of limitation under the central excise law could be invoked when the duty-paid clearances to the assessee's own unit resulted in revenue neutrality.

Analysis: The duty paid on clearances to the assessee's granulation unit was available as Modvat credit in that unit. In such a revenue-neutral situation, the omission to adopt the correct value for each grade of the goods did not justify an allegation of intent to evade duty. Once intention to evade was not established, the longer limitation period could not be applied.

Conclusion: The extended period was not invocable and the demand raised beyond the normal period was unsustainable.

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