Limitation for Modvat credit recovery turned on absence of suppression, making extended limitation unavailable.

A demand for recovery of Modvat credit was held time-barred because the notice was issued beyond the normal six-month limitation period and the department failed to establish facts justifying the extended period. Disclosure of the credit in prescribed returns showed that the assessee had not suppressed material facts, and the department was already aware that the credit had been taken. In the absence of specific evidence of suppression, wilful misstatement, or similar conduct, the extended limitation could not be invoked, so the recovery demand was barred by limitation in favour of the assessee.

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Issues: Whether the demand for recovery of Modvat credit was barred by limitation and whether the extended period could be invoked on the ground of suppression or misstatement of facts.

Analysis: The notice to recover credit was issued more than six months after the credit had been taken. In the absence of specific facts showing suppression, wilful misstatement, or other circumstances attracting the extended period, the normal period of limitation applied. The assessee had disclosed the credit in the prescribed returns, and the department was aware that credit had been taken. The foundation for invoking the extended period was therefore not established.

Conclusion: The demand was barred by limitation and the invocation of the extended period was unjustified, in favour of the assessee.

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