CX - Tribunal was not justified in recording its finding on inapplicability of extended period of limitation by ignoring facts mentioned in O-in-O - Revenue appeal allowed: High Court
By TIOL News Service
ALLAHABAD, JUNE 09, 2015: CCE, Ghaziabad has filed an appeal before the High Court against the Order passed by the CESTAT insofar as it holds that the extended period of limitation was not available to the revenue, as no mala fide can be attributed to the assessee for invocation of the longer period of limitation.
The facts are that the Audit Team noticed that the assessee had taken CENVAT Credit in FY 2005-06 on items namely, Shape & Section, M.S. Plate, H.R. Plate, M.S. Channel, Angles, Roughly Shaped, Forged Rolls, Paints & Primer, Aluminum Bar etc. and which, as per the department, was not admissible as they did not qualify as "capital goods" under the CCR, 2004.
A SCN came to be issued on 22.04.2010 for denial of credit so availed by invoking the extended period of limitation.
The CCE confirmed the demand of Rs.77.21 lakhs and imposed equivalent penalty and interest.
In appeal, the CESTAT vide its order 24th July, 2014 disposed of the appeal of the assessee with an observation that on merits the availment of the cenvat credit on the items in question stands decided against the assessee as per the order of the Larger Bench of the Tribunal in the case of Vandana Global Ltd. - 2010-TIOL-624-CESTAT-DEL-LB but on the ground of limitation the Tribunal held that since the law had been declared by the Larger Bench under the aforesaid judgment and further since earlier orders were in favour of the assessee, no mala fide can be attributed to the assessee so as to invoke the longer period of limitation.
Holding that there has been no suppression on the part of the assessee, the demand was set aside along with penalty except for a miniscule amount of Rs.54,000/- which aspect of the matter was remanded to the Original Adjudicating Authority for decision afresh.
As mentioned, the Revenue is not happy with the CESTAT dropping the demand on the ground of limitation.
Submissions were made by both sides.
The High Court extracted paragraph 4.1.7 of the order of the Commissioner wherein it is mentioned that the assessee had tried to suggest that the law laid down in the case of Vandana Global Ltd. was not applicable in the facts of his case as none of the items were used for supporting structure of foundation and therefore, cenvat credit could not be denied.
It was thereafter observed by the High Court that the reasons disclosed in the order of the Commissioner have been completely ignored by the Tribunal and, therefore, the Tribunal was not justified in recording its finding on inapplicability of the extended period of limitation.
The High Court further observed that the plea sought to be raised that the assessee had bona fide doubts with regard to the availability of cenvat credit on the items in question and that the law in that regard has been settled by the Tribunal in the case of Vandana Global Ltd. is clearly an after thought and an attempt to improve upon their explanation as was furnished before the Commissioner.
Noting that in the CCR, 2004, a burden is cast upon the manufacturer to ensure that CENVAT credit is correctly claimed by them and proper records are maintained in that regard, the High Court after placing reliance on the decisions in Mehta & Company - 2011-TIOL-17-SC-CX, Neminath Fabrics Pvt. Ltd. - 2011-TIOL-10-HC-AHM-CX, Continental Foundation Joint Venture 2007-TIOL-152-SC-CX, Jai Prakash Industries Ltd., 2002-TIOL-633-SC-CX-LB observed thus -
"32. The assessee, in response to the show-cause notice had stated that there is no provision in Central Excise Law to disclose the details of the credit or to submit the duty paying documents, which in our opinion is false and an attempt to deliberately contravene the provisions of the Act, 1944 and the rules made thereunder with an intent to evade the duty.
33. In our opinion, the facts of the present case clearly suggest willful suppression of material facts by the assessee as well as contravention of the provisions of the Act and rules framed thereunder with an intent to evade the demand of duty as would be covered by Clauses IV and V of Section 11 A (1) of the Act, 1944. Therefore, the invocation of the extended period of limitation in the facts of the present case is fully justified. Reference may be had to the judgment of the Apex Court in the case of Usha Rectifier Corporation (I) Ltd. (Supra), where-under the Apex Court has held that where the assessee had not disclosed the fact of manufacturing of the goods to the department and the knowledge of manufacture came to be acquired by the department only subsequently and in view of non-disclosure of such information by the assessee and suppression of relevant facts would rightly result in invocation of extended period of limitation ."
Holding that the extended period of limitation had rightly been invoked in the facts of the present case, the Tribunal order to this extent was quashed and the Central Excise appeal was allowed.
(See 2015-TIOL-1416-HC-ALL-CX)
