Extended limitation for Cenvat credit reversal fails where prior audit noticed the issue and no intent to evade duty is shown.

Demand for reversal of Cenvat credit on written-off inputs was held to be time-barred because the extended limitation period could not be invoked. Prior audit had already noticed the non-reversal, the assessee was a public sector undertaking, and there was no evidence of intent to evade duty. On those facts, the longer period of limitation was unsustainable, so the limitation objection succeeded in favour of the assessee.

---

---

Issues: Whether the demand for reversal of Cenvat credit on written-off inputs was barred by limitation, so as to invalidate the invocation of the extended period.

Analysis: The demand had been confirmed by invoking the longer period of limitation. The relevant facts showed that the factory had been audited earlier and the non-reversal of credit on written-off inputs had already been noticed. The appellant was also a public sector undertaking. In these circumstances, and in the absence of evidence showing an intent to evade duty, the extended period could not be sustained.

Conclusion: The invocation of the extended period of limitation was not justified and the objection on limitation succeeded in favour of the assessee.

---