Extended limitation for CENVAT credit demands requires strict proof of suppression or intent to evade; disclosure in returns defeats invocation.

Extended limitation under section 11A(4) of the Central Excise Act could not be invoked for recovery of allegedly inadmissible CENVAT credit because the notice did not allege suppression in the ER-1 returns and the credit had been disclosed in returns filed from time to time. The statutory requirements of fraud, collusion, wilful misstatement, suppression of facts, or contravention with intent to evade duty must be strictly established; mere self-assessment or detection during audit is insufficient. Reliance on self-assessment and alleged non-disclosure, without addressing the actual allegations in the notice, was inconsistent with the legal threshold for the extended period.

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Issues: Whether the extended period of limitation under section 11A(4) of the Central Excise Act, 1944 was rightly invoked for recovery of allegedly inadmissible CENVAT credit.

Analysis: The demand was founded on an allegation that inadmissible credit had been deliberately and intentionally availed on ineligible input services, but the show cause notice did not allege suppression of information in the ER-1 returns. The appellant had disclosed availment of credit in the returns filed from time to time. To invoke the extended period, the statutory conditions of fraud, collusion, wilful misstatement, suppression of facts, or contravention with intent to evade duty must be strictly established. Mere self-assessment, or the fact that the irregularity surfaced during audit, does not by itself constitute suppression with intent to evade. The reasoning adopted in the impugned order relied on self-assessment and alleged non-disclosure to the department, but those grounds did not answer the actual allegation in the notice and were inconsistent with the requirement of proving the ingredients of section 11A(4).

Conclusion: The extended period of limitation was not validly invoked, and the invocation thereof was held to be erroneous; the assessee succeeded on the limitation issue.

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