Extended period of limitation unavailable where similar credit cases showed divergent departmental views and prior assessee relief

Where credit was denied by invoking the extended period of limitation, the CESTAT Chandigarh held that the extended period was unavailable because similar cases had already been decided in favour of assessees and the Revenue had itself challenged those orders, showing divergent departmental views. The dispute was not examined on merits; the decisive factor was that the show cause notice relied on the extended period despite this ambiguity. On that basis, the limitation objection succeeded, the denial of credit was treated as time-barred, and consequential relief followed.

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Issues: Whether denial of credit was barred by limitation when the show cause notice invoked the extended period despite divergent views and prior grant of credit in similar cases.

Analysis: The dispute was not examined on merits. The determining factor was that in similarly placed cases credit had been allowed, and the Revenue itself had taken appeals against such orders, showing divergent views on the issue. In such circumstances, the extended period of limitation was held to be unavailable. Since the show cause notice was issued by invoking the extended period, the limitation objection succeeded.

Conclusion: The denial of credit was held to be barred by limitation and the assessee succeeded on that ground.

Final Conclusion: The impugned order was set aside and the appeal was allowed with consequential relief.

Ratio Decidendi: Where the issue is subject to divergent departmental views and similar cases have been decided in favour of assessees, the extended period of limitation cannot be invoked.

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