Modvat credit requires prior intimation, and extended limitation cannot apply without proof of wilful evasion.

Modvat credit on inputs was denied because the assessee had not declared its intention to claim such credit to the Department; mere disclosure of the finished product in the classification list did not amount to prior intimation, and the claim that the finished product and inputs were the same was rejected. The demand for the period beyond six months was held time-barred because wilful intention to evade duty was not established, even though the credit had been reflected in RT-12 returns. The denial of Modvat credit was sustained, but the demand was confined to the six-month limitation period.

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Issues: (i) Whether the appellant was entitled to Modvat credit on inputs when its intention to avail such credit had not been declared to the Department; (ii) Whether the demand was barred by limitation for the period beyond six months in the absence of proof of wilful intention to evade duty.

Issue (i): Whether the appellant was entitled to Modvat credit on inputs when its intention to avail such credit had not been declared to the Department.

Analysis: The final product being shown in the classification list did not amount to a declaration that Modvat credit would be availed on the inputs. The factual basis of the cited precedent was different, as there the assessee had indicated its intention to take credit. Here, there was no prior intimation to the Department that Modvat credit would be claimed, and the plea that the finished product and inputs were the same was rejected.

Conclusion: The appellant was not entitled to Modvat credit.

Issue (ii): Whether the demand was barred by limitation for the period beyond six months in the absence of proof of wilful intention to evade duty.

Analysis: Although the appellant had reflected the credit in RT-12 returns, wilful intention to evade duty was not established. On that basis, the extended period could not be applied to sustain the demand beyond six months.

Conclusion: The demand for the period beyond six months was time-barred.

Final Conclusion: The denial of Modvat credit was sustained, but the demand was curtailed to the extent of the six-month limitation period, and the appeal failed except for that modification.

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