Extended limitation for MODVAT credit demand fails where returns disclosed the credit and no suppression was shown.

MODVAT credit demand and penalty could not be sustained by invoking the extended period because the credit was recorded in statutory returns, assessed by the proper officer, and the department had been informed about removal of inputs. The record did not support suppression or misstatement, and the allegation of forged invoices was not established on the stated facts. The demand was therefore time-barred, and invocation of the extended period of limitation was not sustainable.

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Issues: Whether the demand of MODVAT credit and penalty could be sustained by invoking the extended period of limitation on the allegation of forged invoices and suppression of facts.

Analysis: The credit had been taken and reflected in the statutory returns, which were assessed by the proper officer. The appellants also informed the department about removal of inputs and thereafter returned the defective goods to the manufacturer on payment of duty. In these circumstances, the record did not support an allegation of suppression or misstatement so as to justify invocation of the extended period.

Conclusion: The demand was held to be time-barred and the invocation of the extended period was not sustainable.

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