Extended limitation for CENVAT credit demand rejected where records were maintained and no suppression was shown; demand, interest and penalty fell.

CENVAT credit on packing materials used at a depot was examined mainly on limitation. The dispute on credit eligibility had already been settled earlier, and the record showed maintained statutory returns and records, with no reliable evidence of suppression, misdeclaration or contumacious conduct. On that basis, the ingredients for invoking the extended period of limitation were not made out, so the demand was time-barred. As the demand itself could not survive, the related interest and penalty were also unsustainable and were liable to be set aside.

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Issues: Whether the extended period of limitation was invocable for the demand of CENVAT credit on packing materials used at the depot, and whether the related demand, interest and penalty could be sustained.

Analysis: The dispute on eligibility of credit on the packing materials had already been settled in earlier proceedings, and the present matter turned on limitation. The material placed on record showed maintenance of statutory records and filing of returns, with no reliable basis to infer suppression, misdeclaration or any contumacious conduct. In these circumstances, the ingredients necessary to invoke the extended period were not established. Once the demand itself failed on limitation, the foundation for interest and penalty also disappeared.

Conclusion: The extended period of limitation was not available. The confirmed demand was unsustainable, and the interest and penalty imposed were also liable to be set aside.

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