2017 (5) TMI 1227 - AT - Central Excise

Tribunal rules Show Cause Notice time-barred; interest liability upheld for delayed Cenvat credit returns.

The Tribunal held that the Show Cause Notice issued three years after the disputed period was time-barred due to no suppression of fact or wilful ... CENVAT credit - job-work - goods were not received back within 180 days - extended period of limitation - Held that: - there is no suppression of fact or wilful mis-statement etc. on the part of the appellant. That is why the SCN issued for the present facts cannot be legally sustained. The merit of the demand does not need any comments as the SCN itself is time-barred. The demand is time barred it is enjoined on the part of the appellant to honour the liability of interest automatically. The appellant has failed to honour the liability of interest which accrued automatically for the period, when they crossed the limit of 180 days’ period within which the goods are required to be returned to principal manufacturer, who is the appellant. The liability of interest is limited to the amount of CENVAT credit only for the period beyond 180 days, when goods were not returned and credit continued in the assessee’s books of accounts. Only the liability of interest for the period exceeding the 180 days’ limit when CENVAT credit continued in the assessee’s account is sustained and for requantification of said liability of interest, the matter is remanded to the original adjudicating authority - appeal allowed by way of remand. Issues:1. Appeal against demand for Cenvat credit and penalties confirmed by Order-in-Appeal.2. Appellant availed credit for raw materials sent to job worker but not received back within 180 days.3. Department issued Show Cause Notice proposing demand confirmation.4. Tribunal's consideration of the time-barred Show Cause Notice and liability of interest.Analysis:1. The appellant, a commercial vehicle manufacturer, availed Cenvat credit for raw materials sent to a job worker under Rule 4(5)(a) of the Cenvat Credit Rules, 2004. The raw materials were not received back within the prescribed 180 days, leading to a demand for reversal of Cenvat credit. Subsequently, the appellant re-availed the credit upon receiving the goods back, prompting the department to issue a Show Cause Notice for demand confirmation, interest, and penalty.2. The Tribunal noted that the Show Cause Notice was issued almost three years after the period in dispute, invoking the extended period of limitation. However, as there was no suppression of fact or wilful misstatement by the appellant, the Notice was deemed time-barred. The Tribunal emphasized that the liability of interest automatically accrues if goods are not returned within 180 days, as held in the case law cited. The appellant failed to honor this interest liability, leading to a remand for quantification by the adjudicating authority.3. Citing legal precedents, including Supreme Court decisions, the Tribunal upheld the liability of interest for the period exceeding 180 days when Cenvat credit remained in the appellant's accounts. The matter was remanded for the original adjudicating authority to determine the interest liability within four months, ensuring due process for the appellant. Consequently, the impugned order was modified to reflect the sustained interest liability, partially allowing the appeal.This comprehensive analysis highlights the key legal issues, the Tribunal's considerations, and the application of relevant case law in the judgment, providing a detailed overview of the case.