CENVAT credit limitation: disclosed credit in monthly returns and prior audit scrutiny barred extended recovery.

Monthly CENVAT credit disclosures in returns defeated invocation of the extended limitation period where the assessee had specifically reported credit on a cold room and the departmental audit had already examined the relevant period without objection. On those facts, the department could not later treat the same disclosed availment as suppression or concealment for recovery purposes. The demand for reversal of CENVAT credit was therefore time-barred.

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Issues: Whether the demand for reversal of CENVAT credit was barred by limitation in view of the assessee having disclosed the credit availed on the cold room in monthly returns and the department's earlier audit scrutiny.

Analysis: The assessee had filed monthly returns under Rule 7 of the CENVAT Credit Rules, 2002 and had specifically shown the credit taken on the cold room. The records also showed that the departmental audit, supervised by the Commissioner, had examined the relevant period and did not raise any objection at that time. In these circumstances, there was no basis to invoke the extended period for recovery, since the department cannot treat the very same disclosed availment as suppressed after having had access to the returns and audit material.

Conclusion: The demand was held to be time-barred and the issue was decided in favour of the assessee.

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