2018 (6) TMI 312 - AT - Central Excise

Tribunal rules in favor of appellant on time-barred CENVAT credit issue

M/s Basant Rubber Factory Ltd. Versus Commissioner of Central Excise, Mumbai-III

The Tribunal held that the demand for inadmissible CENVAT Credit on outward transportation in March 2008 was not sustainable due to being time-barred. It ... Time limitation - suppression of facts - no malafide intent - CENVAT credit - outward transportation availed in the month of March, 2008 - Scope of SCN - Held that:- Section 11AC can only be invoked when there is suppression of facts, willful mis-statement, fraud, collusion etc. with intent to evade payment of duty. Since, no such charge was made in the show-cause notice, the adjudicating authority has no power to invoke Section 11AC, which is beyond the scope of show-cause notice - there is no suppression of facts or willful mis-statement on part of the appellant as regards the availment of CENVAT Credit on outward transportation. As regards the admissibility of the outward transportation, there were plethora of litigation and there were conflicting judgments - the issue involved grave interpretation of law. For this reason also, no malafide can be attributed to the appellant. The demand is not sustainable on time bar - appeal allowed - decided in favor of appellant. Issues involved: Admissibility of CENVAT Credit on outward transportation in March 2008; Time bar for invoking Section 11AC.Admissibility of CENVAT Credit: The appellant did not dispute that the credit was not admissible on outward transportation during the relevant time. The appellant argued that the demand was time-barred as the show-cause notice did not allege suppression of facts, misdeclaration, collusion, or willful misstatement necessary for invoking Section 11AC. The appellant contended that since the factory's excise records were audited in December 2008 and August 2009, and the auditors were aware of the credit availed on outward transportation in March 2008, there was no suppression of facts. The appellant relied on various judgments to support their argument. The Assistant Commissioner for the Revenue argued that the appellant did not disclose the availed CENVAT Credit on outward transportation to the Department until 2010, indicating suppression of facts. The Assistant Commissioner cited judgments to support their position.Analysis of Admissibility: The Tribunal noted that the appellant did avail the CENVAT Credit in March 2008, and subsequent audits in 2008 did not raise any objections regarding the credit. The show-cause notice did not allege suppression of facts or willful misstatement necessary for invoking Section 11AC. The Tribunal emphasized that Section 11AC can only be invoked in cases of suppression of facts, willful misstatement, fraud, collusion, etc., with intent to evade duty, which was not the case here. The Tribunal held that there was no suppression of facts regarding the CENVAT Credit on outward transportation.Interpretation of Law: The Tribunal acknowledged the existence of conflicting judgments on the admissibility of outward transportation CENVAT Credit, indicating a grave interpretation of the law. Referring to a recent Supreme Court decision on the issue, the Tribunal found that no malafide intent could be attributed to the appellant due to the legal complexities involved. The Tribunal distinguished the case from a precedent cited by the Revenue, emphasizing that the absence of a charge of suppression in the show-cause notice was crucial in the present case.Conclusion: The Tribunal concluded that the demand was not sustainable due to being time-barred. The impugned order was set aside, and the appeal was allowed with consequential relief, if any, in accordance with the law.