Extended limitation for CENVAT credit demand fails absent suppression despite regular audit and disclosed invoices.

Extended limitation for CENVAT credit demand could not be invoked where the assessee's records had been regularly audited and the department failed to establish suppression, misstatement, fraud or collusion. The notice relied on audits of other units but did not show any concealment by the assessee, while the invoices were furnished with refund claims and the surrounding facts supported a bona fide belief that credit was available. On that basis, the demand was barred by limitation and the impugned order was set aside, leaving the merits of credit entitlement untouched.

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Issues: Whether the demand of CENVAT credit could be sustained by invoking the extended period of limitation in the absence of suppression, misstatement, fraud or collusion, where the appellant's records had been subjected to regular audit and the invoices were furnished along with refund claims.

Analysis: The appeal was confined to the limitation issue, the merits being left untouched. The record showed that the appellant's unit had been audited from time to time and the RG-1 register reflected such audit. The show cause notice referred to audits of other units but did not establish any audit-related suppression on the part of the appellant. In these circumstances, the ingredients necessary to invoke the extended period were not shown to exist. The surrounding facts also supported a bona fide belief that credit was available, including the absence of any endorsement on the invoices that the suppliers were availing exemption and the subsequent restoration of the exclusion position by Notification No. 02/2014.

Conclusion: The extended period could not be invoked and the demand was barred by limitation. The impugned order was liable to be set aside, and the appeal succeeded in favour of the assessee.

Final Conclusion: The dispute was finally resolved on limitation alone, with no adjudication on the merits of the credit entitlement.

Ratio Decidendi: Where the assessee's records have been regularly audited and the department fails to establish suppression or other statutory ingredients for extended limitation, the demand cannot be sustained by invoking the extended period.

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