Modvat credit limitation: disclosed aluminium bobbins and no suppression meant the extended recovery period did not apply.

Disclosure of aluminium bobbins in Modvat declarations and return filings meant the department was aware that credit was being taken on those inputs. On the facts stated, there was no material of knowing misstatement or deliberate suppression of facts, and the respondents could reasonably treat the bobbins as inputs under the Modvat scheme. The extended period of limitation for recovery was therefore held not applicable, with the demand barred by limitation and the departmental appeals unsuccessful.

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Issues: Whether the extended period of limitation for recovery of Modvat credit was applicable in respect of aluminium bobbins declared as inputs under the Modvat scheme.

Analysis: The respondents had disclosed in their declarations and return filings that they were taking credit on aluminium bobbins, and the department was aware of this position for a substantial period. On the facts, the respondents could reasonably treat the bobbins as inputs, and there was no material to show that they knowingly mis-stated the nature of the goods or deliberately suppressed facts so as to attract the extended limitation period.

Conclusion: The extended period was not attracted and the demands were barred by limitation; the departmental appeals failed.

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