Tax liability upheld with penalties for willful evasion. Extended period invoked. Show Cause Notice ruled in favor of department.

The adjudicating authority confirmed the demand of Rs. 27,72,837/- along with interest and imposed a penalty of Rs. 13,86,419/-. The Noticee's arguments were found without merit, and the extended period invocation was justified. The penalty was imposed due to willful suppression and intent to evade payment. The Show Cause Notice was decided in favor of the department, confirming liabilities and penalties against the Noticee.

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Issues Involved:
1. Liability to pay an amount along with interest under Rule 6(3) of CENVAT Credit Rules, 2004.
2. Justification of the invocation of the extended period.
3. Imposition of penalty under Rule 15 of CENVAT Credit Rules, 2004 read with Section 11AC of Central Excise Act, 1944.

Issue-wise Detailed Analysis:

1. Liability to Pay an Amount Along with Interest:
The Noticee engaged in manufacturing excisable goods and trading activities did not maintain separate accounts for input services as required under Rule 6(2) of CENVAT Credit Rules, 2004. Consequently, they were liable to pay an amount at the rates specified in Rule 6(3). The Noticee argued that trading was not an exempted service post-01-07-2012; however, the adjudicating authority found that trading remained an exempted service throughout the period in question. The authority confirmed the liability to pay Rs. 27,72,837/- under Rule 6(3) read with Rule 14 of CENVAT Credit Rules, 2004 along with interest under Section 11AA of Central Excise Act, 1944.

2. Justification of the Invocation of the Extended Period:
The department discovered the non-compliance during an audit, indicating willful suppression of facts by the Noticee. The Noticee did not disclose their trading activities or the availing of CENVAT credit on common input services. As a result, the extended period of five years under Section 11A of Central Excise Act, 1944 was invoked, which the adjudicating authority found justified due to the Noticee's willful suppression and evasion of payment.

3. Imposition of Penalty:
Given the willful suppression of facts and intent to evade payment, the provisions of Rule 15(2) of CENVAT Credit Rules, 2004 were applicable. The authority imposed a penalty equal to 50% of the confirmed amount, amounting to Rs. 13,86,419/-, under Rule 15 read with Section 11AC of Central Excise Act, 1944. The adjudicating authority emphasized that the Noticee's actions warranted this penalty due to the fraudulent intent and non-compliance with the statutory provisions.

Conclusion:
The adjudicating authority confirmed the demand of Rs. 27,72,837/- along with interest and imposed a penalty of Rs. 13,86,419/-. The Noticee's arguments regarding the non-existence of trading as an exempted service post-01-07-2012 and the proportional reversal of CENVAT credit were found without merit. The extended period invocation was justified, and the penalty was imposed due to willful suppression and intent to evade payment. The Show Cause Notice was thus decided in favor of the department, confirming the liabilities and penalties against the Noticee.

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