Modvat credit on common inputs denied where exempted products were also manufactured; extended limitation upheld.

Modvat credit was unavailable for common inputs used in both dutiable and exempted final products where Rule 57C applied to inputs consumed in the exempted product. A declaration filed for credit purposes had not disclosed that the inputs were also used for flexible layflat tubing cleared at nil duty, and entries in classification lists, RG 23A records and RT 12 returns did not cure that omission. The later plea of bona fide mistake was rejected because the exempted product had already been shown in the classification list and exemption had been claimed. On those facts, the extended limitation period applied and the demand was not time-barred.

---

---

Issues: Whether Modvat credit was admissible on common inputs used in the manufacture of both dutiable and exempted final products and whether the demand was barred by limitation on the ground of absence of suppression.

Analysis: Rule 57C barred availment of Modvat credit in respect of inputs used for exempted final products. The appellants had not disclosed in the Modvat declarations that the inputs were also used in the manufacture of flexible layflat tubing, an exempted product cleared at nil duty. Mention of the product in classification lists, RG 23A records and RT 12 returns did not cure the omission in the declaration filed for Modvat credit. The later plea of bona fide mistake was also rejected because the same exempted item had been shown in the classification list and exemption had been claimed. On these facts, the Tribunal held that the extended period could be invoked and the demand was not time-barred.

Conclusion: Modvat credit was not admissible in respect of inputs used for the exempted product and the demand was not hit by limitation. The appeal failed.

---