1996 (7) TMI 332 - AT - Central Excise

Summary

Issues: Time-barred demand for availing Modvat credit on rejected goods.

In this case, the appellant availed of Modvat credit for duty paid on goods returned as rejects, leading to a demand for Rs. 12,750. The initial order was set aside due to the demand being beyond the normal limitation period. However, a subsequent Show Cause Notice was issued invoking the extended period, resulting in the confirmation of the demand. The main issue raised was the time-bar aspect, contending that the credit was availed and declared within the statutory period. The appellant argued that there was no suppression on their part, as all necessary documents were submitted for scrutiny. The respondent alleged misstatement, claiming the entry made was ambiguous, intending to mislead. The appellant's compliance with filing requirements and approval of returns were highlighted to support their position. The rule allowing the invocation of an extended period in cases of misstatement, collusion, or suppression was examined, with no collusion alleged and no overt act of misstatement by the appellant. The appellant's timely declaration of credit and approval of returns were crucial in determining the limitation period for issuing the Show Cause Notice. Ultimately, the demand was deemed time-barred, and the order confirming it was set aside, allowing the appeal.