Extended limitation is unavailable for interpretational disputes over CENVAT credit eligibility.

Balasore Alloys Ltd. took CENVAT credit on steel and other items used to make furnace casings and tapping rods, and to fabricate, repair and maintain plant, machinery and supporting structures.

Six show-cause notices were adjudicated together. The Commissioner dropped some demands but confirmed ₹1,59,66,066, principally for items used in fabrication, repair and maintenance, relying on the Larger Bench decision in Vandana Global.

The assessee appealed, arguing, among other things, that Vandana Global had since been reversed by the Chhattisgarh High Court and that the extended limitation period was unavailable.

1. Whether CENVAT credit was admissible on steel items used to make casings and tapping rods, and on items used to fabricate, repair or maintain capital goods and their supporting structures

2. Whether the confirmed demand could be sustained on the basis of the Larger Bench decision in Vandana Global, after that decision had been reversed by the Chhattisgarh High Court

3. Whether the extended period of limitation was invocable

Rule 2(a) and Rule 2(k) of the CENVAT Credit Rules, 2004 govern credit on capital goods and inputs, including inputs used in or in relation to manufacture; Rule 14 provides for recovery of wrongly taken credit, while the proviso to Section 11A of the Central Excise Act, 1944 permits an extended limitation period in specified circumstances.

The Tribunal noted that the Larger Bench ruling in Vandana Global Ltd. v. CCE, Raipur, 2010 (253) E.L.T. 440 (Tri.-LB), had been reversed by the Chhattisgarh High Court, and referred to decisions including CCE, Jaipur v. Rajasthan Spinning & Weaving Mills Ltd., 2010 (255) E.L.T. 481 (S.C.), applying the “user test” to determine whether goods used to make an integral or accessory part of capital goods qualify for credit.

The Tribunal also applied the principle that an interpretive dispute, in the circumstances identified here, did not justify invoking the extended period.

The Tribunal held that the Commissioner’s reliance on Vandana Global could not stand because that decision had been reversed; it also recognised that steel items used to fabricate capital goods and structural supports may qualify for input credit.

However, the assessee had not produced adequate evidence identifying and substantiating the actual use of the disputed items in fabrication, repair and maintenance, including a Chartered Engineer’s certificate. The Tribunal therefore did not decide the normal-period demand on the merits and directed verification of the supporting evidence on remand.

Because the dispute concerned interpretation, it set aside the demand for the extended period.

The demand for the normal period was remanded to the adjudicating authority for reconsideration after the assessee submits a statement of usage certified by a Chartered Engineer. The authority was directed to pass a reasoned order within four months of receiving the Tribunal’s order.