2012 (7) TMI 603 - AT - Central Excise

Tribunal rules in favor of assessee in CENVAT Credit case, rejecting time-barred notice and upholding demand.

CCE Daman Versus M/s Bilag Industries Pvt. Ltd.

The Tribunal ruled in favor of the assessee in a case involving CENVAT Credit availed on furnace oil used for steam production sold to a subsidiary. Show ... Cenvat credit paid on furnace oil - demand for the period involved is from April 2003 to February 2005 - reversal of CENVAT Credit on the furnace oil consumed for the clearance of steam to their sister concerns - Show Cause Notice for the period April 2003 to June 2004 is issued on 26.07.2005 and for the period July 2004 to February 2005, is issued on 28.7.2005 – Held that:- Show Cause Notice dt.26.7.05 is belatedly time barred - Revenue was aware of the issue and the Show Cause Notices were issued to the appellant on 28.04.2004 by invoking extended period of limitation - Revenue could not have invoked extended period of limitation for the demand the duty - demand for the period April 2003 to Jun3 2004 set aside Cenvat credit paid on furnace oil – demand for the reversal of CENVAT Credit on the furnace oil consumed for the clearance of steam to their sister concerns - For the period July 2004 to February 2005 - Show Cause Notice was issued on 28.7.2005 – Held that:- SCN is within the period of limitation and on merit – against assessee Cenvat credit paid on furnace oil - demand for the reversal of CENVAT Credit on the furnace oil consumed for the clearance of steam to their sister concerns - Show Cause Notice is issued on 12.08.2005 for the period December 2001 to March 2003 – Held that:- Show Cause Notice dt.12.08.2005 is belatedly time barred, inasmuch as the very same issue was in question in the earlier Show Cause Notice dt.28.04.2004 and hence the Revenue could not have invoked the extended the period of limitation in this Show Cause Notice Cenvat credit paid on furnace oil – demand for the reversal of CENVAT Credit on the furnace oil consumed for the clearance of steam to their sister concerns - Show Cause Notice was issued on 13.01.2006 for the period March 2005 to 15..05.2005 – Held that:- Entire period is within limitation and no extended period is involved – Against assessee Imposition of penalty on the appellant for the period wherein confirmation of demand within limitation – Held that:- Appellant has been under the bonafide belief that he need not reverse CENVAT Credit used for the purpose of manufacturing of steam which is supplied to their sister concern, till the issue was decided against them by the Tribunal – Penalty set aside Issues:1. CENVAT Credit availed on furnace oil used for manufacturing steam sold to sister concern.2. Show Cause Notices issued for recovery of wrongly availed CENVAT Credit.3. Appeal by Revenue against Order-in-Appeal in favor of assessee.4. Cross objections filed by assessee.5. Limitation period for Show Cause Notices.6. Imposition of penalty on appellant.Analysis:1. The appeals were against Order-in-Appeals concerning CENVAT Credit availed on furnace oil used for producing steam sold to a subsidiary without reversing the credit. Show Cause Notices were issued for recovery. The first appellate authority ruled in favor of the assessee, prompting the Revenue to file an appeal. The assessee also filed cross objections, which were essentially supporting the Order-in-Appeals.2. The cross objection by the assessee was considered as written submissions supporting the impugned Order-in-Appeals and was disposed of accordingly. The counsel for the assessee acknowledged that the issue was settled against them in a previous case decided by the Tribunal, which was upheld by the High Court. The Revenue argued against the appellant on merit and limitation regarding the CENVAT Credit availed on the furnace oil used for steam production.3. The Tribunal examined the submissions and records. It found one Show Cause Notice to be time-barred, following a Supreme Court decision, and upheld the setting aside of the demand for a specific period. For another period, the Show Cause Notice was within the limitation period, and the demand was upheld based on the High Court's decision against the assessee.4. In another appeal, the Tribunal noted that the Show Cause Notice was time-barred as the same issue was raised in an earlier notice. The impugned order was upheld, and the Revenue's appeal was rejected. In a third appeal, the Tribunal upheld the demand for a specific period within the limitation period, rejecting the appellant's case on merit.5. Regarding the penalty, the Tribunal considered the appellant's belief and circumstances, concluding that no penalty should be imposed due to a genuine belief held by the appellant. The demands within the limitation period were upheld with interest, but no penalty was imposed on the appellant due to the circumstances of the case.6. All appeals and cross objections were disposed of accordingly, with the operative portion of the order pronounced in court.