Revenue-neutral Cenvat credit disputes do not justify extended limitation absent mala fide suppression or intent to evade duty.

The extended period of limitation cannot be invoked for demand of reversal of Cenvat credit on inputs cleared as such to sister units where the arrangement is revenue neutral and there is no mala fide suppression or misstatement with intent to evade duty. The duty attributable to the disputed reversal would have remained available as credit to the recipient units for payment of excise duty, so no evasion intent could be attributed. Accordingly, the demand could not be sustained on the basis of the extended limitation period.

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Issues: Whether the extended period of limitation could be invoked for demand of reversal of Cenvat credit on inputs cleared as such to sister units, in the presence of revenue neutrality and absence of mala fide.

Analysis: The appellant was a public sector undertaking and the duty attributable to reversal of credit on the inputs cleared to sister units would have been available as credit to those units for payment of excise duty. The arrangement was therefore revenue neutral. In such circumstances, no intention to evade duty or mala fide suppression could be attributed so as to justify invocation of the extended period.

Conclusion: The extended period of limitation was not invokable, and the demand could not be sustained on that basis.

Ratio Decidendi: Where the disputed credit reversal is revenue neutral and there is no mala fide suppression or misstatement with intent to evade duty, the extended period of limitation cannot be invoked.

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