Area-based exemption self-credit recovery was held time-barred because the department already knew the claim.

Under the area-based exemption notification, an assessee entitled to self-credit of duty paid in cash after utilising CENVAT credit was found not liable to recovery on a delayed demand. Regular ER-1 returns, filed in manual and electronic form, and departmental verification certificates showed that the self-credit claim was already within the department's knowledge. On those facts, the Tribunal held that the recovery claim was time-barred and that the extended period of limitation could not be invoked, making the demand unsustainable.

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Issues: Whether the demand for recovery of self-credit/refund under the area-based exemption notification was barred by limitation and whether the extended period could be invoked.

Analysis: The appellant was availing area-based exemption under Notification No. 20/2007-C.E. dated 25.04.2007 and was entitled to take self-credit of duty paid in cash after utilising CENVAT credit. The monthly ER-1 returns were filed regularly in both manual and electronic form, and the departmental verification certificates had confirmed the self-credit taken. In these circumstances, the department was already aware of the refund/self-credit claim, yet the show cause notice for the relevant period was issued later. On these facts, the Tribunal found that the claim for recovery was time-barred and that the extended period of limitation was not available.

Conclusion: The extended period of limitation was not invokable and the demand was unsustainable.

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