Extended limitation cannot apply without suppression; reversed credit did not attract interest or penalty on these facts.

Where the Department already had access to the relevant CENVAT credit disclosures through audit and ST-3 returns, and no suppression of facts or intent to evade duty was shown, the extended period of limitation could not be invoked and the demand failed. On the same facts, the mere reversal of credit did not create an independent interest liability, and penalty was also unavailable because the foundation of deliberate suppression was absent. The demands, interest and penalty were accordingly set aside, with consequential relief.

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Issues: (i) whether the demand could be sustained by invoking the extended period of limitation; (ii) whether interest was payable on the CENVAT credit reversed by the appellant; and (iii) whether penalty was imposable.

Issue (i): whether the demand could be sustained by invoking the extended period of limitation.

Analysis: The audit had been in progress for more than four years and the relevant availment of CENVAT credit and tax disclosures were within the Department's knowledge through the audit process and ST-3 returns. No material was shown to establish suppression of facts or an intention to evade duty or tax.

Conclusion: The extended period of limitation was not invocable and the demand could not survive.

Issue (ii): whether interest was payable on the CENVAT credit reversed by the appellant.

Analysis: Since the reversal of credit was found not to be legally warranted on the facts accepted for limitation, the mere act of reversal did not create an independent liability to interest.

Conclusion: No interest was payable.

Issue (iii): whether penalty was imposable.

Analysis: In the absence of established suppression with intent to avail irregular credit or evade tax, the foundation for penalty was absent.

Conclusion: No penalty was imposable.

Final Conclusion: The demands, interest, and penalty were all set aside, and the appeal succeeded with consequential relief.

Ratio Decidendi: Where the Department is already in possession of the relevant records through audit and statutory returns, and no suppression or intent to evade is established, the extended period cannot be invoked and ancillary liability to interest and penalty also fails.

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