Extended limitation cannot rest on a later audit objection after earlier scrutiny raised no issue on CENVAT credit.

Extended limitation could not be invoked where the disputed CENVAT credit on outward transportation of waste had already been examined in an earlier audit and no objection was raised. A later audit objection, without other statutory grounds, was insufficient to sustain a show cause notice or demand beyond the normal period. The demand was therefore held time-barred, and the reasoning was treated as consistent with precedent that a second audit objection does not, by itself, justify extended limitation after prior scrutiny of the same credit availment.

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Issues: Whether the show cause notice and demand were barred by limitation when the first audit had examined the relevant credit availment and raised no objection, and the demand was founded on a subsequent audit objection.

Analysis: The disputed credit related to outward transportation of waste arising in the course of manufacture. The record showed that the first audit had already scrutinised the appellant's CENVAT credit availment for a period covering the disputed period and had not objected to the credit on outward transportation. The later notice relied on a second audit for a subsequent period to invoke the extended limitation. In these circumstances, the facts necessary to sustain the extended period were not established, and the demand based on the later audit was held to be beyond limitation. The reasoning was supported by the cited precedent that a second audit objection, after an earlier audit had examined the matter, does not by itself justify invocation of the extended period.

Conclusion: The demand was time-barred and the impugned order could not be sustained; the issue was decided in favour of the assessee.

Final Conclusion: The order denying credit and imposing penalty was set aside, and the appeal succeeded on the question of limitation.

Ratio Decidendi: Where the relevant CENVAT credit issue has already been examined in an earlier audit and no objection was raised, the department cannot invoke the extended period of limitation merely on the basis of a later audit objection absent other statutory grounds for extended limitation.

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