CENVAT credit under EOU imports must use duty actually leviable and charged; extended limitation needs proof of suppression.

For CENVAT credit under Rule 3(7)(a) of the CENVAT Credit Rules, 2004, inputs procured from EOUs must be computed with reference to the basic customs duty actually leviable and charged; substituting the tariff rate of basic customs duty is not permitted, so the assessee's method was rejected on the merits. On limitation, the extended period could not be invoked in the absence of material showing suppression of facts or similar conduct, so the demand was confined to the normal limitation period. The result was partial relief on limitation while the substantive credit computation issue was decided against the assessee.

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Issues: (i) Whether, for computing CENVAT credit under Rule 3(7)(a) of the CENVAT Credit Rules, 2004 in respect of inputs procured from EOUs, the tariff rate of basic customs duty could be adopted instead of the basic customs duty leviable and charged. (ii) Whether the extended period of limitation could be invoked for the demand.

Issue (i): Whether, for computing CENVAT credit under Rule 3(7)(a) of the CENVAT Credit Rules, 2004 in respect of inputs procured from EOUs, the tariff rate of basic customs duty could be adopted instead of the basic customs duty leviable and charged.

Analysis: The formula in Rule 3(7)(a) specifically refers to basic customs duty leviable and charged. The calculation adopted by the assessee by taking the tariff rate of BCD did not conform to the rule. The authorities and the cited decisions were examined, but the dispute before the Tribunal was confined to the correct application of the statutory formula, and the Tribunal found no legal basis to substitute the tariff rate for the duty leviable and charged.

Conclusion: The issue was decided against the assessee.

Issue (ii): Whether the extended period of limitation could be invoked for the demand.

Analysis: The demand arose from an audit objection, and no material was brought on record to establish suppression of facts or other circumstances necessary for invoking the extended period. In the absence of specific findings sustaining such invocation, the demand could not travel beyond the normal limitation period.

Conclusion: The issue was decided in favour of the assessee.

Final Conclusion: The demand was upheld only to the extent it fell within the normal period, while relief was granted on limitation, resulting in a partial allowance of the appeal.

Ratio Decidendi: For CENVAT credit under Rule 3(7)(a) of the CENVAT Credit Rules, 2004, the computation must follow the basic customs duty actually leviable and charged, and the extended period of limitation cannot be invoked without proof of suppression or similar conduct.

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