Cenvat credit on transferred moulds failed on merits, but demand was quashed as time-barred for bona fide belief.

100% Cenvat credit on moulds transferred during the interim period in October 2000 was held inadmissible because the governing rules at that time did not permit full credit on capital goods removed in the same financial year, and the later regime could not be applied retrospectively. However, the demand was held time-barred because an identical issue in the assessee's own case had already been decided in its favour elsewhere, supporting a bona fide belief and showing no suppression or intent to evade duty. The appeal therefore succeeded on limitation, and the demand was annulled despite the adverse finding on merits.

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Issues: (i) Whether 100% Cenvat credit was admissible on moulds transferred during the interim period in October 2000 when the relevant rules did not provide for such availment; (ii) Whether the demand was barred by limitation on account of absence of suppression or intent to evade duty.

Issue (i): Whether 100% Cenvat credit was admissible on moulds transferred during the interim period in October 2000 when the relevant rules did not provide for such availment.

Analysis: The relevant provision did not contemplate availment of 100% Cenvat credit on capital goods removed in the same financial year during the period in dispute. The later regime permitting such credit could not be applied to the interim period. The earlier contrary view relied upon by the assessee was not accepted.

Conclusion: The issue was decided against the assessee on merits.

Issue (ii): Whether the demand was barred by limitation on account of absence of suppression or intent to evade duty.

Analysis: An identical issue in the assessee's own case had already been decided in its favour at another commissionerate, supporting a bona fide belief that the credit was admissible. In these circumstances, the ingredients necessary for invoking the extended period were not made out.

Conclusion: The extended period was held to be unavailable and the demand was set aside as time-barred.

Final Conclusion: The appeal succeeded on limitation, resulting in annulment of the impugned demand despite the adverse finding on merits.

Ratio Decidendi: Where the governing rule for the relevant period does not permit full credit, the claim fails on merits, but the extended limitation period cannot be invoked when the assessee acted under a bona fide belief supported by an identical prior order in its own case.

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