Extended limitation under CENVAT credit dispute fails where omission was bona fide and no mala fide intent was found.

Non-reversal of CENVAT credit on a few common inputs and input services was treated as a bona fide omission where proportionate credit had already been reversed on the major items. Because the appellate authority had dropped penalty on the finding that there was no mala fide intention to evade duty, and that finding had attained finality, the same factual basis could not be used to invoke the extended period of limitation. On the facts, the circumstances relevant to penalty and extended limitation were identical, so the extended period was not available and the demand could not be sustained on that basis.

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Issues: Whether the extended period of limitation could be invoked for the demand arising from non-reversal of CENVAT credit on certain common inputs and input services, and whether the assessee's bona fides negatived such invocation.

Analysis: The assessee had already reversed proportionate credit on the major common inputs and input services, and the omission in respect of gas, iron and inward transportation was treated as a bona fide lapse. The penalty had been dropped by the appellate authority on the finding that there was no mala fide intention to evade duty, and that finding had attained finality as it was not challenged by the Revenue. Once absence of mala fides was accepted for the purpose of penalty, the same factual foundation could not be relied upon to invoke the extended period of limitation, since the circumstances relevant to penalty and to extended limitation were held to be identical in the present case.

Conclusion: The extended period of limitation was not invocable, and the impugned demand could not be sustained on that basis.

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