Limitation on interest demand for wrongly taken CENVAT credit barred recovery where extended period was not established.

Interest on wrongly taken CENVAT credit was held to be subject to limitation, and the department could not invoke the extended period without establishing the necessary facts. As the show cause notice was issued beyond the normal period and the credit on capital goods had been reversed before utilisation, the demand of interest could not be sustained on the facts of the case. The appeal was allowed on limitation.

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Issues: Whether the demand of interest on wrongly taken CENVAT credit was barred by limitation and, if so, whether the appeal succeeded on that ground.

Analysis: The appeal concerned interest on CENVAT credit availed on capital goods and reversed before utilization. The Tribunal held that the show cause notice was issued beyond the normal period and that the department had not established facts justifying invocation of the extended period. It further held that limitation applies to interest liability as well, and therefore the demand could not be sustained on the facts of the case.

Conclusion: The demand of interest was held to be barred by limitation, and the appeal was allowed.

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