Extended limitation for Cenvat credit reversal fails where disclosures are made in records and the dispute arises from a later audit view.

Extended limitation could not be invoked for demanding reversal of Cenvat credit where the dispute concerned credit attributable to exempted goods under Rule 6(3A) of the Cenvat Credit Rules, 2004. The relevant records had already been audited, and the alleged discrepancy arose only from a later audit view, showing no suppression of facts or wilful misstatement with intent to evade duty. As the material facts were disclosed in returns and records, the ingredients for extended limitation were not met. The demand was therefore barred by limitation and the issue was decided in favour of the assessee.

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Issues: Whether the extended period of limitation could be invoked for demanding reversal of Cenvat credit on the ground of wrongful availment and short reversal.

Analysis: The dispute related to reversal of credit attributable to exempted goods under Rule 6(3A) of the Cenvat Credit Rules, 2004. The records had been subjected to audit, and the alleged discrepancy arose from a different view taken in a later audit. In such circumstances, the ingredients required for invoking the extended period, namely suppression of facts or wilful misstatement with intent to evade duty, were not established. The reasoning was supported by the principle that when the relevant facts are disclosed in returns and records and the issue emerges from a subsequent audit objection, the extended limitation cannot be sustained.

Conclusion: The invocation of the extended period was unsustainable and the demand was barred by limitation. The decision was in favour of the assessee.

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