2011 (9) TMI 897 - HC - Central Excise

Interpretation of Section 11A for Excise Duty Recovery: One-Year Limit & Relevant Date Clarified

The judgment focused on interpreting Section 11A for excise duty recovery, emphasizing a one-year limit from the relevant date. It clarified the relevant ... Manufacture - Assessee engaged in the manufacture of brass strips, phosphor bronze strips and copper strips falling under chapter sub-heading 7409 21 00, 7409 11 00 and 7409 31 00 respectively. The Commissioner confirmed demand of ₹ 3,50,33,094/- under Rule 14 read with proviso to Section 11A as irregular credit availed by it - Tribunal held that demand barred by limitation - Held that:- departmental authorities are fully aware of the activities undertaken by the assessee during the material period. It had periodically filed returns relating to receipt of inputs and availment of Cenvat credit. It had also filed periodical returns showing payment of excise duty on its final products. Authorities never raised objection to the assessee taking and utilizing Cenvat credit during the material period for payment of duty on its final products as reflected in the monthly ER-1 returns. Therefore, the impugned demand invoking larger period under Rule 14 of the Cenvat Rules read with proviso to Section 11A is not sustainable. The Revenue has not made out a case that the assessee had suppressed any relevant fact from the department or took the Cenvat credit of duty paid with an intention to evade payment of duty on final products - as the demand was made beyond the period of one year, it was clearly barred by time - Decided against Revenue. Issues:1. Interpretation of Section 11A for recovery of excise duty.2. Determining the relevant date for initiating recovery proceedings.3. Application of the time limitation for recovery of wrongly utilized Cenvat credit.4. Assessment of the Revenue's claim based on Rule 14 of the Cenvat Rules.5. Evaluation of whether the demand is barred by limitation.6. Consideration of fraud, collusion, wilful statement, or suppression of facts in the case.Analysis:1. The judgment delves into the interpretation of Section 11A concerning the recovery of excise duty, emphasizing that the provision allows recovery within one year from the relevant date. It highlights that the grievance of the Revenue pertains to the wrongful availing of Cenvat credit by the assessee.2. The determination of the relevant date for initiating recovery proceedings is crucial in this case. The judgment clarifies that the relevant date would be when the assessee wrongly utilized or used the Cenvat credit. It underscores that proceedings for recovery must be initiated within one year from that date, except in cases involving fraud, collusion, wilful statement, or suppression of facts.3. Regarding the application of the time limitation for recovery of wrongly utilized Cenvat credit, the Tribunal's decision is analyzed. It is noted that the departmental authorities were fully aware of the activities of the assessee during the material period, as evidenced by the filing of returns related to inputs, Cenvat credit, and excise duty payments on final products. The judgment concludes that the demand invoking a larger period under Rule 14 of the Cenvat Rules is unsustainable.4. The assessment of the Revenue's claim based on Rule 14 of the Cenvat Rules is a significant aspect of the judgment. It is highlighted that the Revenue failed to establish that the assessee suppressed relevant facts or intended to evade duty payment on final products by taking Cenvat credit of duty paid.5. The judgment evaluates whether the demand is barred by limitation, emphasizing that as the demand was made beyond the one-year period, it was considered time-barred. The decision to allow the appeal is justified based on the absence of grounds to interfere with the order.6. Lastly, the judgment considers the presence of fraud, collusion, wilful statement, or suppression of facts in the case. It concludes that none of these factors were established, leading to the determination that the demand is indeed barred by limitation. The substantial question of law is answered in favor of the assessee, resulting in the dismissal of the appeal.