Extended limitation cannot rest on a mere verification lapse; absence of suppression defeats recovery action.

The extended period of limitation could not be invoked for recovery of credit because the show cause notice did not allege suppression of material facts or diversion of inputs. The dispute arose from premature use of inputs before the prescribed 48-hour verification period under Rule 56A, but this was treated as a technical procedural breach rather than concealment. As the department had the opportunity to verify the declarations within the normal limitation period, the legal basis for extended limitation was absent. The assessee therefore succeeded on this issue.

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Issues: Whether the extended period of limitation could be invoked for recovery of credit when the show cause notice did not allege suppression of facts and the dispute related to premature use of inputs before the prescribed verification period under Rule 56A.

Analysis: The notice contained no allegation of suppression or diversion of inputs. The record showed that D 3 declarations had been filed and that the issue arose from taking some inputs into use before the expiry of the 48-hour period meant to enable verification by the department. Such non-compliance was treated as a technical or procedural infringement, not as concealment of material facts. Since the department had the opportunity to verify the position within the normal period, the basis for applying the extended period was absent.

Conclusion: The extended period was not invocable. The order of the Collector (Appeals) was unsustainable and the assessee succeeded on this issue.

Ratio Decidendi: In the absence of an allegation or proof of suppression of material facts, a mere procedural breach in relation to verification of inputs does not justify invocation of the extended period of limitation.

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