Limitation for Cenvat credit denial requires proof of fraud or suppression; recorded supplementary invoices cannot by themselves justify extended period.

Extended period of limitation for denying Cenvat credit on supplementary invoices requires proof of fraud, suppression, or wilful misstatement with intent to evade duty. Where the assessee has filed statutory returns and recorded the credit in prescribed records, and the department has not established any deliberate concealment or called for relevant documents, invocation of the extended period fails. Mere availment of credit on supplementary invoices, without evidence of intent to evade, is insufficient. As a result, the demand is time-barred and penalties cannot be sustained.

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Issues: Whether the show cause notice invoking the extended period of limitation for denial of Cenvat credit taken on supplementary invoices was barred by limitation, and whether the penalties could survive if the demand was time-barred.

Analysis: The majority held that the assessee had filed the prescribed returns and maintained the credit entries in the statutory records, while the department had not called for the relevant documents or established any positive act of fraud, suppression, or wilful misstatement with intent to evade duty. It was further held that the recipient of supplementary invoices could not be charged with suppression merely because the supplier's duty demand was later confirmed on grounds attracting the proviso to Section 11A, especially when the recipient had no reliable basis to infer any deliberate evasion on its part. On this reasoning, the invocation of the extended period failed.

Conclusion: The demand of Cenvat credit was held to be time-barred, and the penalties could not be sustained.

Ratio Decidendi: The extended period under Section 11A of the Central Excise Act, 1944 can be invoked only on proof of fraud, suppression, or wilful misstatement with intent to evade duty, and mere availment of credit on supplementary invoices reflected in statutory records is insufficient without such proof.

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