Extended limitation for Modvat credit demand fails absent suppression, fraud or misstatement; demand held time-barred.

The extended limitation period under the proviso to Section 11A of the Central Excise Act could not be invoked for denial of deemed Modvat credit because the Department already knew the credit-related facts, the RT 12 returns had been finally assessed, and the show cause notice contained no allegations of fraud, collusion, suppression of facts or misstatement. A mere reference to Rule 57G(2) of the Central Excise Rules was insufficient to justify the longer period where the alleged contravention was not established on the record. The demand was therefore time-barred and the finding was in favour of the assessee.

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Issues: Whether the demand for denial of deemed Modvat credit was barred by limitation under the proviso to Section 11A of the Central Excise Act, 1944, in the absence of allegations of fraud, collusion, suppression of facts or misstatement, and whether reference to Rule 57G(2) of the Central Excise Rules, 1944 justified invocation of the extended period.

Analysis: The credit-related facts were known to the Department, the relevant RT 12 returns had been finally assessed, and the show cause notice did not contain allegations of suppression, misstatement, fraud or collusion. The mere reference to contravention of Rule 57G(2) was not sufficient to displace the requirement under the proviso to Section 11A for invoking a longer period, especially when such contravention was not established on the record.

Conclusion: The demand was time-barred, and the extended period could not be applied; the finding was in favour of the assessee.

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