Limitation on proforma credit demand: disclosed inputs and verified gate passes prevented invocation of the extended period.

Proforma credit under Rule 56A was held time-barred because the source of the inputs had been specifically disclosed in the D-3 declaration and the gate passes were verified by the departmental officer. As the relevant particulars of the inputs were already available to the Department at the verification stage, the extended period of limitation could not be invoked. The text also notes that, if the officer had concerns about the source or nature of the inputs, the proper course was to insist on the subsidiary gate pass during verification rather than reopen the matter later on limitation grounds. The demand was therefore treated as barred by time and the Revenue's appeal failed.

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Issues: Whether the demand of proforma credit under Rule 56A was barred by limitation and whether the extended period could be applied when the source of inputs was disclosed in the D-3 declaration and gate passes were verified by the departmental officer.

Analysis: The source of acquisition of the inputs was specifically disclosed in the D-3 declaration along with the gate passes. The particulars of the inputs tallied with the gate passes, and no evidence was recorded to show that the supplier had mixed exempted and duty-paid starch in a manner concealed from the Department. Where the material particulars were available to the Department at the stage of verification and clearance, the extended period of limitation could not be invoked. If the officer was concerned about the source or nature of the inputs, the appropriate course was to require the subsidiary gate pass at the verification stage rather than allow credit and later reopen the matter on limitation grounds.

Conclusion: The demand was rightly held to be time-barred and the Revenue's appeal failed.

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