Bona fide CENVAT credit dispute barred extended limitation where divergent views existed on capital goods eligibility.

Extended period of limitation was held inapplicable where CENVAT credit on structural material used in the factory was taken under a bona fide interpretational dispute. The dispute turned on classification and eligibility, with the goods treated as falling under Chapter 84, while Revenue relied on decisions concerning goods under Chapters 72 and 73 that were not specifically covered as capital goods. As different Benches had taken divergent views, the credit claim could not be characterised as mala fide, and the ingredients for invoking the extended period were not satisfied. The demand therefore could not be sustained on limitation.

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Issues: Whether the extended period of limitation could be invoked for reversal of CENVAT credit on structural material used in the factory, where the credit had been taken under a bona fide interpretation dispute.

Analysis: The credit dispute arose in a setting where the goods were treated as falling under Chapter 84 and were used in the factory of manufacture. The decisions relied on by the Revenue concerned goods classifiable under Chapters 72 and 73, which were not specifically included in the definition of capital goods. The order also recognized that the matter involved interpretation and that different Benches had taken different views. In those circumstances, the taking of credit could not be treated as mala fide, and the ingredients for invoking the extended period were not satisfied.

Conclusion: The extended period of limitation was not invocable. The assessee succeeded on limitation and the demand could not be sustained.

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