Prospective operation of fiscal notifications and bona fide belief barred extended limitation and penalties.

A subsequent fiscal notification granting Cenvat credit on debits made in the DEPB passbook was held to operate only prospectively, so the assessee could not claim retrospective benefit for the relevant period. However, because the assessee acted under a bona fide belief supported by existing Tribunal rulings, suppression of facts was not established and the extended period of limitation was not invocable. On that basis, the demand was confined to the normal period and the penalties were set aside.

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Issues: (i) whether the subsequent notification granting Cenvat credit on debits made in the DEPB passbook operated retrospectively; and (ii) whether the extended period of limitation and penalties were invocable in the facts of the case.

Issue (i): whether the subsequent notification granting Cenvat credit on debits made in the DEPB passbook operated retrospectively.

Analysis: The amended notification was held to confer the benefit only prospectively. The earlier legal position, as applied by the lower authority, did not permit the credit claimed on the basis of debit in the DEPB passbook. The later change in the notification could not be applied to the relevant period to enlarge the entitlement retrospectively.

Conclusion: The retrospective claim was rejected and the notification was treated as prospective only, against the assessee.

Issue (ii): whether the extended period of limitation and penalties were invocable in the facts of the case.

Analysis: The assessee had acted under a bona fide belief supported by existing Tribunal rulings. In that situation, suppression of facts was not established, and the conditions for invoking the extended period were not satisfied. On the same reasoning, the penalties could not survive.

Conclusion: The demand was confined to the normal period and the penalties were set aside, in favour of the assessee.

Final Conclusion: The denial of credit was sustained on the question of retrospectivity, but the demand was restricted to the normal limitation period and the penal portion of the order was annulled, resulting in a partial relief to the assessee.

Ratio Decidendi: A subsequent fiscal notification operates prospectively unless expressly made retrospective, and where the assessee acts under a bona fide belief supported by prevailing Tribunal decisions, suppression of facts and the extended period of limitation are not attracted.

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