2017 (4) TMI 270 - HC - Central Excise

High Court clarifies time limit for tax notice issuance and Cenvat credit eligibility

Commissioner of C. Ex., Cus. & S.T., Bilaspur Versus Ultra Tech Cement Ltd.

Commissioner of C. Ex., Cus. & S.T., Bilaspur Versus Ultra Tech Cement Ltd. - 2017 (347) E.L.T. 3 (Chhattisgarh) Issues:1. Interpretation of limitation period under Section 11A(3) and (4) of the Central Excise Act, 1944 for issuing notice to the assessee.2. Eligibility of Cenvat credit claimed by the assessee on construction items.3. Determination of fraudulent intent or suppression of facts by the assessee.Analysis:The High Court of Chhattisgarh heard an appeal challenging the orders of the Customs, Excise and Service Tax Appellate Tribunal (CESTAT) regarding the limitation period for issuing a notice to the assessee. The assessee, a manufacturer of Portland Cement and Cement Clinker, claimed Cenvat credit for the period between March 2006 to June 2009 on various construction projects. The Revenue contended that the assessee claimed credit on items not directly related to Cement and Clinker, leading to the notice being issued in 2012. The dispute revolved around the application of Section 11A(3) and (4) of the Central Excise Act, 1944, which provides for a one-year limitation period, extendable to five years in cases of fraud, collusion, or wilful misstatement.The CESTAT held that the five-year limitation period was not applicable as the items claimed for credit were not directly related to the manufacturing process of Cement and Clinker. The court noted that the assessee did not suppress any facts or misstate any information, leading to the conclusion that the limitation period should be one year. The court emphasized that the issue of limitation is primarily a question of fact rather than a substantial question of law. Additionally, the court found that the assessee's claim for Cenvat credit, though incorrect, did not involve fraudulent intent or dishonesty, as there was an ongoing debate on the eligibility of such credit for setting up manufacturing facilities.Ultimately, the High Court upheld the decision of the CESTAT, stating that the assessee did not engage in fraudulent behavior or suppression of facts. The court concluded that the limitation period for issuing the notice should be one year, dismissing the appeal on the grounds that no substantial question of law arose from the case. The judgment highlights the importance of factual analysis in determining the applicability of limitation periods and the absence of fraudulent intent in assessing claims for tax credits.