2020 (4) TMI 500 - AT - Central Excise

Tribunal grants appeal, rejects extended limitation period, appellant wins

The Tribunal set aside the demand, ruling in favor of the appellant, as the Revenue could not prove the need for invoking the extended limitation period. ... Extended period of limitation - CENVAT Credit - exempt goods - demand on the ground that Refined Cotton Seed Oil which is the major product of the appellant was exempted from payment of Excise Duty with effect from 01.03.2006 vide Notification No. 04/2005-C.E. dated 01.03.2005 as amended - HELD THAT:- A more or less similar issue has been addressed to by this Bench in the case of M/S SRIBA AGRO LTD., VERSUS CCE & ST, GUNTUR [2016 (12) TMI 272 - CESTAT HYDERABAD] wherein this Bench has held that the Show Cause Notice issued after invoking the extended period of limitation could not sustain. The issue being identical, it is held that the appellant will have to succeed on limitation since the Revenue has not made out a case for invoking the extended period of limitation - demand set aside - appeal allowed - decided in favor of appellant. Issues:- Applicability of Central Excise Duty on unintended waste/by-products- Availing CENVAT Credit on inputs used for waste/by-products- Violation of Notification No. 89/1995-C.E.- Upholding of demand by Adjudicating Authority- Appeal against Order-in-Appeal dated 25.02.2014- Show Cause Notice issued on grounds of duty payment cessation- Contesting the reversal of CENVAT Credit- Issue of limitation in the Show Cause NoticeAnalysis:1. Applicability of Central Excise Duty on unintended waste/by-products:The appellant, a manufacturer of Refined Cotton Seed Oil, faced a dispute regarding the payment of duty on unintended waste/by-products, namely soap stock and acid oil. The Revenue initially directed the appellant not to pay duty on soap stock, which was followed by the appellant. However, a Show Cause Notice was later issued alleging a violation of Notification No. 89/1995-C.E. The Adjudicating Authority confirmed the demand, leading to the appeal.2. Availing CENVAT Credit on inputs used for waste/by-products:The appellant had also availed CENVAT Credit on inputs and capital goods used for the clearance of soap stock and acid oil. The issue arose when the Revenue asked for the reversal of CENVAT Credit availed on these inputs, leading to a dispute regarding the applicability of duty on the waste/by-products.3. Violation of Notification No. 89/1995-C.E.:The alleged violation of Notification No. 89/1995-C.E. dated 18.05.1995 was a key issue in the case, as the Revenue claimed that the appellant had not complied with the conditions of the notification, leading to the proposed recovery of duty along with interest and penalty.4. Upholding of demand by Adjudicating Authority:Despite the appellant's explanations and submissions, the Adjudicating Authority confirmed the demand in Order-in-Original No. 30/2013-CE (JC) dated 16.04.2013, which was upheld by the Commissioner of Customs, Central Excise, and Service Tax in the impugned Order-in-Appeal dated 25.02.2014, prompting the filing of the appeal by the assessee.5. Show Cause Notice issued on grounds of duty payment cessation:The Show Cause Notice was issued primarily due to the cessation of duty payment by the appellant on the advice of the Revenue, creating a dispute over the duty liability on the waste/by-products and the availed CENVAT Credit.6. Contesting the reversal of CENVAT Credit:The appellant contested the Revenue's request for the reversal of CENVAT Credit, arguing that the duty on soap stock was paid based on the Revenue's instructions, and any reversal request after a significant period was unjustified, especially when the soap stock had already been cleared after duty payment.7. Issue of limitation in the Show Cause Notice:The appellant raised the issue of limitation, arguing that the Show Cause Notice was issued long after the duty payment cessation, without any grounds of suppression or fraud. The appellant contended that the Revenue was well aware of the situation due to their involvement in advising on duty payments.In conclusion, the Tribunal set aside the demand, emphasizing that the Revenue failed to establish a case for invoking the extended period of limitation. The appeal was allowed in favor of the appellant, granting consequential benefits as per the law.