2015 (10) TMI 2590 - AT - Central Excise

Appeal allowed due to time-barred demand for interest and penalty on cenvat credit. Limitation period crucial.

M/s. Bharat Aluminium Co Ltd. Versus C.C.E. & S.T., Raipur

The appeal was allowed in favor of the appellant as the demand for interest and penalty for delayed reversal of cenvat credit was found to be time-barred ... Penalty - Time limitation - Reversal of cenvat credit - Held that: - It is an admitted fact that irregularly availed cenvat credit and subsequently reversal thereof is not attributable to any fraud, collusion, misstatement with intent to evade payment of duty. In such an eventuality, the Department was required to issue the SCN within a period of one year from the relevant date i.e. reversal of cenvat credit - The Hon’ble Supreme Court in the case of T.V.S. Whirlpool [1999 (10) TMI 701 - SUPREME COURT OF INDIA] have held that period of limitation is not only applicable for the claim of the Principal amount, but has also applicable to the claim of interest thereon - appeal allowed - decided in favor of appellant. Issues:Demand of interest and imposition of penalty by invoking the extended period of limitation for delayed reversal of cenvat credit.Analysis:The judgment in question pertains to a dispute involving the demand of interest and penalty for delayed reversal of cenvat credit. The appellant argued that the reversal of cenvat credit was done upon the detection of a mistake by the Department and that the demand for interest and penalty is time-barred as there was no suppression, fraud, or collusion involved in the irregular availment of cenvat credit. The appellant relied on the judgment of the Hon'ble Supreme Court in the case of Commissioner of Customs, Madras vs T.V.S. Whirlpool Ltd. to support their argument that the confirmation of the demand is not justified.The Department, represented by the respondent, reiterated the findings of the impugned order. The Member (Judicial) heard arguments from both sides and examined the records. It was noted that the irregular availing and subsequent reversal of cenvat credit were not due to any fraudulent intentions. In such cases, the Department was required to issue a Show Cause Notice (SCN) within one year from the relevant date, i.e., the reversal of cenvat credit. However, in this instance, the SCN was issued on 03.10.2013, covering the period from April 2006 to November 2008, which was beyond the limitation period. The judgment cited the precedent set by the Hon'ble Supreme Court in the T.V.S. Whirlpool case, emphasizing that the limitation period applies not only to the principal amount but also to the interest claimed.Based on the above analysis, the Member (Judicial) concluded that the demand for interest and penalty, as confirmed by the authorities below, was not justified due to the time-barred nature of the SCN. The impugned order passed by the Ld. Commissioner (Appeals) was found to lack merit, leading to its setting aside. Consequently, the appeal was allowed in favor of the appellant. The judgment was dictated and pronounced in open court by the Member (Judicial) S.K. Mohanty.