Extended period of limitation cannot be invoked for Modvat credit when duty payment and disclosure are duly recorded.

Modvat credit taken on the strength of a Customs certificate and disclosed in the prescribed registers and RT-12 returns could not justify the extended period of limitation absent deliberate suppression. Because the goods had suffered basic duty and countervailing duty and the credit was reflected in statutory records, the demand for reversal of credit and the penalty were unsustainable. The article concludes that the impugned demand and penalty were set aside, with consequential relief to the assessee.

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Issues: Whether the demand for reversal of Modvat credit and the penalty could be sustained by invoking the extended period of limitation when the duty payment was certified by Customs and the credit was reflected in the statutory records.

Analysis: The credit was taken on the basis of a Customs certificate evidencing payment of basic duty and countervailing duty. The goods had in fact suffered duty, and the taking of credit was reported in the prescribed registers and RT-12 returns. In these circumstances, there was no material to deliberate suppression or to justify invocation of the extended period. The controversy was therefore confined to limitation, and the eligibility of the document did not survive as a substantive basis for sustaining the demand.

Conclusion: The invocation of the extended period was not justified, and the demand and penalty could not be sustained. The appeal was allowed in favour of the assessee on limitation.

Final Conclusion: The impugned demand and penalty were set aside, with consequential relief flowing to the assessee.

Ratio Decidendi: Where the assessee has disclosed the credit in the prescribed records and the duty payment is evidenced by official certification, the extended period of limitation cannot be invoked in the absence of deliberate suppression.

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