Interpretational dispute over Cenvat credit eligibility barred use of the extended limitation period and defeated the demand.

Divergent departmental views on eligibility to Cenvat credit showed that the dispute was interpretational, so invocation of the extended period of limitation was not justified. Where similarly placed assessees had been allowed credit and the Revenue had challenged those orders, the demand could not be sustained on limitation. The denial of credit was therefore held barred by limitation, and the assessee succeeded.

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Issues: Whether denial of Cenvat credit was barred by limitation when the show cause notice invoked the extended period in a situation where there were divergent views on eligibility to credit.

Analysis: The appellant's credit claim related to a period for which the department itself had taken inconsistent positions in similar matters, with credit having been allowed to similarly placed assessees and the Revenue having filed appeals against such orders. In that background, the issue was not examined on merits. The existence of divergent departmental views showed that the matter was one of interpretational dispute, for which invocation of the extended period of limitation was not justified.

Conclusion: The denial of credit was held to be barred by limitation and the appeal succeeded.

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