Extended limitation for Cenvat credit denial fails absent mala fides; penal demand beyond normal period cannot survive.

Extended limitation for denial of Cenvat credit was found unwarranted where the record did not establish mala fides or the ingredients needed for the penal extended period. The dispute concerned credit on inputs used for exempted goods, and the earlier appellate view had accepted the assessee's entitlement, while later proceedings addressed limitation separately. On these facts, Section 11AC was treated as inapplicable, and the demand raised beyond the normal period could not be sustained. The demand for the period beyond limitation was therefore set aside in favour of the assessee.

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Issues: Whether the extended period of limitation could be invoked for denial of Cenvat credit in the facts of the case.

Analysis: The dispute related to availment of Cenvat credit on inputs used in the manufacture of exempted goods and the consequent invocation of the extended period. The record showed that the earlier appellate view had itself accepted the assessee's entitlement, while the Tribunal later held otherwise on merits and remanded only on limitation. On the facts, the absence of mala fides was significant, and the ingredients required for invocation of the penal extended period were not established. In such circumstances, Section 11AC was held inapplicable and the demand beyond the normal period could not survive.

Conclusion: The extended period of limitation was not invocable and the demand beyond the normal period was set aside in favour of the assessee.

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