2019 (2) TMI 1097 - AT - Central Excise

Dispute over Cenvat credit entitlement resolved in favor of appellant

M/s. Precision Pipes And Profiles Ltd. Versus Commissioner of Customs, Central Excise & Service Tax, Noida

The case involved a dispute over the appellant's entitlement to Cenvat credit for additional Customs Duty paid through DEPB scrips. The Revenue invoked ... CENVAT credit of additional customs duty - duty was discharged on DEPB scrips - Revenue entertained a view that the benefit of the additional Customs Duty is available as credit to the appellant only when the same is paid in cash - extended period of limitation u/s 11-A(1) of the Central Excise Act, 1944 - Held that:- Admittedly the show cause notice for the demand in question stands issued on 09.12.02.2005 for the period October 2003 to August 2004 i.e. by invoking the extended period of limitation in terms of the proviso to section 11A of the Central Excise Act. The said proviso provides that in case duty has not been paid on account of fraud, collusion, willful misstatement, suppression of facts or contravention of any of the provisions of the act or the rules made thereunder with intent to evade payment of duty, the period of five years is available to the Revenue to serve notice on such person for such short paid duty. The invocation of longer period of limitation, which is primarily on the ground that the appellant did not file the duty-paying documents along with ER-1 returns and did not stated in the said returns that the CVD was paid through DEPB. There is no reference to any column or clause in the said ER-1 which requires an assessee to disclose the above information. In the absence of any requirement to disclose in the said returns, the factum of payment of CVD through DEPB, we are of the view that non-disclosure, by itself cannot be made the ground for invocation of extended period - the mere fact that the appellant had not stated in the ER-1 returns as regards payment of duty through DEPB cannot be adopted a valid ground to justifiably invoke the extended period of limitation. The demands having been raised beyond the normal period of limitation are barred - appeal allowed - decided in favor of appellant. Issues involved:1. Interpretation of the extended period of limitation under the proviso to section 11A of the Central Excise Act.2. Validity of invoking the extended period of limitation based on the ground of non-disclosure of information in ER-1 returns.3. Consideration of conflicting decisions in favor of the assessee regarding the availability of Cenvat credit for duty paid through DEPB scrips.4. Examination of the applicability of Supreme Court judgments in Nicholas Piramal India Ltd. and Tamil Nadu State Transport Corpn. Ltd. regarding limitation issues.Analysis:Issue 1: Interpretation of the extended period of limitation under the proviso to section 11A of the Central Excise Act.The case involved a dispute regarding the appellant's entitlement to Cenvat credit for the additional Customs Duty paid through DEPB scrips. The Revenue contended that the appellant was not entitled to the credit as the duty was not paid in cash. The Revenue initiated proceedings against the appellant invoking the longer period of limitation under the proviso to section 11-A(1) of the Central Excise Act, 1944. The Tribunal initially allowed the appeal on the point of time bar, but the High Court set aside this decision and remanded the matter for fresh consideration. The Tribunal was directed to examine the findings of the Additional Commissioner and Commissioner(Appeals) on the point of limitation, considering relevant Supreme Court judgments on the invocation of extended limitation periods.Issue 2: Validity of invoking the extended period of limitation based on the ground of non-disclosure of information in ER-1 returns.The Additional Commissioner and Commissioner(Appeals) justified the invocation of the extended period of limitation based on the appellant's alleged suppression of facts regarding the payment of duty through DEPB in the ER-1 returns. However, the Tribunal found that the mere failure to disclose this information, without a legal obligation to do so, cannot be a valid ground for invoking the extended period of limitation. The Tribunal highlighted that the appellant was not required to disclose such information in the absence of a specific clause mandating it in the returns.Issue 3: Consideration of conflicting decisions in favor of the assessee regarding the availability of Cenvat credit for duty paid through DEPB scrips.During the relevant period, there were conflicting decisions regarding the availability of Cenvat credit for duty paid through DEPB scrips. Some decisions favored the assessee, holding that such credit was permissible, while others took a contrary view. The Tribunal noted that the appellant had relied on decisions in their favor and could not be held guilty of any misstatement or suppression with intent to evade duty payment based on the prevailing legal interpretations at that time.Issue 4: Examination of the applicability of Supreme Court judgments in Nicholas Piramal India Ltd. and Tamil Nadu State Transport Corpn. Ltd. regarding limitation issues.The Tribunal examined the applicability of Supreme Court judgments in Nicholas Piramal India Ltd. and Tamil Nadu State Transport Corpn. Ltd. In Nicholas Piramal India Ltd., the Supreme Court upheld a decision holding a show cause notice as barred by limitation. However, the Tribunal distinguished the facts of the present case from the issues addressed in these judgments, emphasizing that the appellant had acted in accordance with favorable legal interpretations prevailing during the relevant period. Consequently, the Tribunal held that the demands raised beyond the normal limitation period were barred, setting aside the impugned order and allowing the appeal with consequential relief.This detailed analysis of the judgment covers the issues involved and the Tribunal's reasoning in addressing each aspect of the case comprehensively.