Appeal partially allowed: Cenvat Credit on CVD debited in DEPB Passbook not admissible. No suppression of fact.

The Tribunal partially allowed the appeal, ruling that the Cenvat Credit on countervailing duty (CVD) debited in the DEPB Passbook, exempted under Notification No.34/97-Cus., was not admissible based on a prior decision. The demand for the extended period was deemed unsustainable as there was no suppression of fact by the appellant, leading to the setting aside of the penalty under Section 11AC.

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Issues involved: Whether countervailing duty exempted by notification No.34/97-Cus. debited in the DEPB Pass Book is eligible for modvat credit or not.

Analysis:

1. Admissibility of Cenvat Credit: The Tribunal noted that the issue of whether Cenvat Credit on countervailing duty (CVD) debited in the DEPB Passbook, exempted under Notification No.34/97-Cus., is admissible had been previously decided against the assessee by a Larger Bench. Therefore, the Tribunal held that the Cenvat Credit on CVD debited in the DEPB Passbook is not admissible based on the earlier decision.

2. Limitation and Penalty under Section 11AC: The appellant argued that the demand for the extended period was time-barred as the issue was contentious and resolved by the Larger Bench decision on 16.8.2004, while the show cause notice was issued on 9.9.2004 for the period August 2003 to November 2003. The Tribunal agreed that there was no suppression of fact on the part of the appellant, and thus, the proviso of Section 11A(1) could not be invoked. Consequently, the demand for the extended period was deemed unsustainable. The penalty under Section 11AC was also deemed not imposable due to the lack of suppression of fact by the appellant. Therefore, the penalty imposed under Section 11AC was set aside, and the demand for the normal one-year period under Section 11A(1) was upheld.

3. Case Law and Submissions: The appellant cited various decisions to support their arguments, including Polyhose India Pvt. Ltd., Commissioner of C. Ex., Ludhiana Vs. Neel Kanth Rubber Mills, and others. The Revenue, represented by the Superintendent (A.R.), relied on decisions such as Mohan Breweries & Distilleries Ltd. Vs. Commr. of C. Ex., Pondicherry and others to support their position. However, the Tribunal's decision was based on the specific facts and circumstances of the case, ultimately leading to the partial allowance of the appeal.

In conclusion, the Tribunal partially allowed the appeal, holding that the Cenvat Credit on CVD debited in the DEPB Passbook exempted under Notification No.34/97-Cus. was not admissible, but the demand for the extended period was not sustainable due to the absence of suppression of fact by the appellant, leading to the setting aside of the penalty under Section 11AC.

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