Modvat credit and limitation: disclosed records and departmental awareness bar invocation of the extended period absent suppression.

Disclosure of Modvat credit through statutory returns and supporting duty-paying documents, together with departmental audit or record verification showing awareness of the practice, defeats an allegation of suppression. On those facts, the extended period of limitation cannot be invoked to deny credit, because the department had material to know the basis on which credit was being taken. The denial of Modvat credit on that ground was therefore unsustainable.

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Issues: Whether the extended period of limitation could be invoked for denying Modvat credit where the assessee had disclosed the relevant documents in returns and the department was aware of the credit being taken.

Analysis: The relevant rule required the assessee to furnish the original duty-paying documents along with monthly RG 23A extracts to the Superintendent, who was to deface and return them. There was no allegation that this procedure had not been followed. The record also showed that departmental audit had examined the assessee's records over a substantial period, which supported the inference that the department knew that credit was being taken on the basis of the manufacturer's certificates. In these circumstances, the allegation of suppression was not sustainable and the extended limitation period could not be applied.

Conclusion: The invocation of the extended period was unsustainable and the denial of Modvat credit could not be upheld on that basis.

Ratio Decidendi: Where the relevant duty credit is disclosed through statutory returns and departmental audit or record verification shows awareness of the practice, the extended period of limitation cannot be invoked absent suppression of facts.

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