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of <h1>Suo motu CENVAT credit reversal dispute: extended limitation for demand rejected absent suppression amid conflicting legal views</h1> The dominant issue was whether the extended period of limitation could be invoked to demand reversal of CENVAT credit despite the assessee's suo motu ... Suo moto reversal of CENVAT Credit - invocation of extended period of limitation - HELD THAT:- As regards invoking the extended period of limitation, the issue was considered by this Tribunal in the matter of M/s. Volvo India Pvt Ltd Vs. CCE, LTU [2024 (8) TMI 86 - CESTAT BANGALORE], where it is held that when there is a conflicting decision which ultimately got settled by Larger Bench, the question of suppression cannot be alleged against the Appellant. As regards the ratio of the decision of Larger Bench in the matter of M/s. BDH Industries Vs. C.EX.(Appeals), Mumbai-I [2008 (7) TMI 78 - CESTAT MUMBAI-LB], the finding given by the Larger Bench was due to the reason that there was a dispute regarding the finding given by the Tribunal in the matter of M/s. Motorola [2005 (9) TMI 152 - CESTAT, BANGALORE]. However, on appeal Hon’ble High Court of Karnataka has upheld the finding given by this Tribunal in the matter of M/s. Motorola. Further the Appellant is a Central Public Sector undertaking (CPSU) under the administrative control of the Ministry of Defence and suppression cannot be alleged. The impugned order confirming the demand by invoking the extended period of limitation is unsustainable and is liable to be set aside - Appeal allowed. Issues: (i) Whether suo-moto recredit/reversal of CENVAT credit is permissible; (ii) Whether the extended period of limitation can be invoked to confirm demand.Issue (i): Whether suo-moto recredit/reversal of CENVAT credit is permissible.Analysis: The Tribunal examined prior tribunal and High Court decisions including Motorola and subsequent Larger Bench authority. It noted that where excess duty/credit was taken by mistake and subsequently reversed or corrected, and where there is a conflicting line of tribunal authority resolved in favour of allowing correction, re-availement or suo-moto recredit is permissible. The analysis distinguishes cases requiring a statutory refund route under Section 11B from factual situations where an arithmetical or clerical mistake led to excess debit/credit and was rectified, and where no suppression or fraud is shown.Conclusion: The conclusion is in favour of the assessee.Issue (ii): Whether the extended period of limitation can be invoked to confirm demand.Analysis: The Tribunal considered whether suppression or fraud was alleged or established. It held that in the absence of suppression of facts or fraud and where the matter arises from an inadvertent mistake disclosed and rectified in records/returns, the extended limitation cannot be invoked. Conflicting decisions and the status of the dispute as a CPSU matter were noted as relevant to the absence of suppression.Conclusion: The conclusion is in favour of the assessee.Final Conclusion: The impugned order confirming demand by invoking the extended period is set aside and the appeal is allowed with consequential relief, resulting in the recredit/reversal being accepted and the extended-period demand being held unsustainable.Ratio Decidendi: Where excess CENVAT credit arises from inadvertent or arithmetical error disclosed and rectified, suo-moto recredit/reversal is permissible and the extended period of limitation cannot be invoked in the absence of suppression or fraud.
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