Extended limitation for Modvat recovery fails where suppression is not shown and clearance documents disclose the actual destination.

Extended limitation under the proviso to Section 11A with Rule 57-I could not be invoked for recovery of Modvat credit taken in 1986-87 because the notice failed to set out the factual basis for suppression or misstatement. The records indicated that the goods were cleared for use in the Kandla Free Trade Zone, and the accompanying documents showed the intended destination and use. No statement at or before clearance showed that the removals were made for export. A later argument based on Rule 57F(3)(iii) did not transform the original clearances into suppression, and any alleged misstatement arising only after clearance and notice could not sustain the extended period.

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Issues: Whether Modvat credit taken between 1986 and 1987 could be recovered by invoking the extended period under the proviso to Section 11A read with Rule 57-I, on the allegation of suppression or misstatement.

Analysis: The notice invoking the extended period did not specify the factual basis required to attract the proviso. The records showed that the goods were cleared for use in the Kandla Free Trade Zone, and there was no statement by the appellant before or at the time of clearance that the clearances were for export. The documents accompanying the removals indicated the intended destination and use. A later contention on the applicability of Rule 57F(3)(iii) could not convert the original clearance into a case of suppression or misstatement. The alleged misstatement, if any, arose only after clearance and after issue of notice, which could not justify the extended period.

Conclusion: The demand was barred by limitation and could not be sustained under the extended period provisions.

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