Cenvat credit on fabrication inputs upheld, while extended limitation failed for want of suppression and evasion.

Cenvat credit on steel bars, angles, channels, MS plates and coils used in fabrication of machinery and capital goods was held admissible for the period up to 07.07.2009, as the amendment to the Cenvat Credit Rules was treated as prospective and the items were used in fabrication work. The extended period of limitation could not be invoked because the dispute was interpretative, the relevant facts were disclosed in statutory returns, and conflicting judicial views negatived any finding of suppression or intent to evade duty. The appeal therefore succeeded on merits for that period and the demand failed on limitation.

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Issues: (i) whether Cenvat credit was admissible on steel bars, angles, channels, MS plates and coils used in fabrication of capital goods and machinery, and (ii) whether the extended period of limitation and consequential demand could be invoked on the alleged suppression of facts.

Issue (i): whether Cenvat credit was admissible on steel bars, angles, channels, MS plates and coils used in fabrication of capital goods and machinery

Analysis: The dispute concerned credit on duty paid inputs used in fabrication of machinery and allied capital goods. For the period up to 07.07.2009, the judicial view accepted that the amendment to the Cenvat Credit Rules was prospective and that credit could not be denied merely on the footing later taken by the department. The appellate record also showed that the items were used in fabrication of machinery and related capital goods.

Conclusion: Credit was admissible for the period up to 07.07.2009, and the assessee succeeded on merits for that period.

Issue (ii): whether the extended period of limitation and consequential demand could be invoked on the alleged suppression of facts

Analysis: The dispute was interpretative, and the records disclosed that the relevant particulars were reflected in the returns. There were conflicting judicial views on eligibility of the credit, which negatived any inference of deliberate suppression or intention to evade duty. In such circumstances, the ingredients required for invoking the extended period were not established.

Conclusion: The extended period was not invocable and the demand failed on limitation.

Final Conclusion: The appeal succeeded on merits for the period up to 07.07.2009 and was allowed in full on limitation, resulting in relief to the assessee.

Ratio Decidendi: Where credit eligibility is governed by conflicting judicial views and the relevant facts are disclosed in statutory returns, the extended period under the proviso to Section 11A cannot be invoked in the absence of proved suppression or intent to evade duty.

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