Extended limitation for Modvat credit recovery fails where full disclosure was made and bona fide belief excluded suppression.

The extended period of limitation under Rule 57-I(1) was unavailable for recovery of Modvat credit where the assessee's clearances, credit availment and related particulars were disclosed in RT-12 returns, RG 23A Part I registers, declarations and removal documents already before the department. Those records gave the department the relevant facts, so suppression or concealment could not be inferred. The assessee's bona fide belief that credit was admissible, supported by an earlier Tribunal ruling and only later settled otherwise by a Larger Bench, further negatived any basis for invoking the extended period. The demand could not therefore be sustained on that ground.

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Issues: Whether the extended period of limitation under Rule 57-I(1) of the Central Excise Rules was available to recover Modvat credit alleged to have been wrongly taken on inputs used in the manufacture of exempted final products.

Analysis: The appellant's clearances and availment of credit were reflected in the monthly RT-12 returns, RG 23A Part I registers, declarations and removal documents furnished to the department. These records were sufficient to place the department in possession of the relevant facts, negating any basis for invoking the extended period. The appellant also held a bona fide view that credit was available, supported by an earlier Tribunal decision, and the position was settled only later by a Larger Bench. On these facts, the requisite element for extending limitation was absent.

Conclusion: The extended period of limitation was not applicable and the demand could not be sustained on that basis, in favour of the assessee.

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