2016 (9) TMI 37 - AT - Central Excise

Tribunal allows appeal on Cenvat Credit admissibility, overturns previous decision

The Tribunal held that the extended period of five years for demand was not applicable in the case concerning the admissibility of Cenvat Credit on MS ... Extended period of limitation - Cenvat credit admissibility on support structures - Bona fide belief - Penalty under Section 11AC of the Central Excise Act, 1944Extended period of limitation - Cenvat credit admissibility on support structures - Bona fide belief - Whether the demand based on disallowance of Cenvat credit on MS channels/beams/joists used for support structures is time barred because the extended five year period is inapplicable. - HELD THAT: - The Bench found that during the relevant period there were conflicting judicial views on the admissibility of Cenvat credit for items used in making support structures and that the issue was finally resolved by the larger Bench in Vandana Global Ltd. v. Commr. C.Ex., Raipur. In these circumstances the assessee had a bona fide belief that the credit was admissible. The decision in Bajaj Hindusthan Ltd. did not turn on the applicability of the extended period; conversely the Gujarat High Court in CCE, Cus. & ST, Daman v. N.R. Agarwal Industries Ltd. held that where an assessee acted bona fide in reliance on a favourable view, the longer period could not be invoked. Applying that settled principle, the Bench concluded that the conditions for invoking the extended five year period were not satisfied and therefore the demand was time barred. [Paras 6, 7]Extended period of five years not applicable; demand is time barred and the appeal is allowed.Final Conclusion: The appeal is allowed; the Order in Appeal dated 23.08.2013 is set aside as the extended period for making the demand is not attracted in view of the bona fide belief arising from conflicting judicial views resolved later by the larger Bench. Issues involved:1. Admissibility of Cenvat Credit on MS Channels/Beams/Joists for support structures2. Applicability of extended period for demandAnalysis:Issue 1: Admissibility of Cenvat Credit on MS Channels/Beams/Joists for support structuresThe Appellant contested the rejection of Cenvat Credit amounting to Rupees 1,19,326, emphasizing conflicting views on the issue's admissibility until the resolution by a larger Bench decision in Vandana Global Ltd. v. Commr. C.Ex., Raipur. The Appellant argued against invoking the extended period and imposing penalties due to the conflicting court views and the resolution only in 2010. The Appellant relied on various case laws to support their stance. The Appellant also cited the Gujarat High Court's decision in Commissioner of C.Ex., Cus. & ST, Daman v. N.R.Agarwal Industries, stating that the extended period cannot be invoked when the belief in admissibility was bona fide.Issue 2: Applicability of extended period for demandThe Revenue contended that the extended period of limitation applies, referring to the Hon'ble Allahabad High Court's decision in Bajaj Hindusthan Ltd. Union of India. The Revenue argued that as penalty under Section 11AC of the Central Excise Act, 1944 was applicable in similar cases, the extended period should also apply in the present proceedings. After hearing both sides and examining the case records, the Tribunal observed conflicting views on the admissibility of Cenvat Credit on the disputed items until the larger Bench decision in Vandana Global Ltd. v. CCE, Raipur. Considering the conflicting views during the relevant period and the Appellant's bona fide belief in the admissibility of the credit, the Tribunal held that the extended period of five years is not applicable in this case. Consequently, the Appeal was allowed, and the Order-in-Appeal dated 23.08.2013 was set aside.