2021 (11) TMI 174 - AT - Central Excise

Tribunal rules no deliberate suppression, sets aside Commissioner's order

The Tribunal held that the extended period of limitation under section 11A(4) of the Central Excise Act could not be invoked as there was no deliberate ... Recovery of CENVAT Credit - service of notice upon the appellant within one year from the relevant date or not - the SCN was issued on March 19, 2015 - invocation of extended period of limitation under sub-section (4) of section 11A of the Excise Act or not - HELD THAT:- A perusal of section 11A (1) of the Excise Act shows that where any duty of excise has not been paid for any reason, other than the reason of fraud or collusion or any wilful mis-statement or suppression of facts or contravention of any of the provisions of the Excise Act with intent to evade payment of duty, the Central Excise Officer shall, within one year from the relevant date, serve notice on the person requiring him to show cause why he should not pay the amount specified in the notice. However, sub-section (4) of section 11A of the Excise Act provides that where any duty of excise has not been levied or short paid by reason of fraud or collusion or any wilful mis-statement, the notice can be issued by the Central Excise Officer within five years from the relevant date. Suppression of facts or not - HELD THAT:- The suppression of facts should be deliberate and in taxation laws it can have only one meaning, namely that the correct information was not disclosed deliberately to escape payment of duty - In EASLAND COMBINES VERSUS COLLECTOR OF C. EX., COIMBATORE [2003 (1) TMI 107 - SUPREME COURT], the Supreme Court observed that for invoking the extended period of limitation, duty should not have been paid because of fraud, collusion, wilful statement, suppression of fact or contravention of any provision. These ingredients postulate a positive act and, therefore, mere failure to pay duty which is not due to fraud, collusion or wilful misstatement or suppression of facts is not sufficient to attract the extended period of limitation. In the present case, what is seen is that the audit was conducted between June 17, 2011 to June 22, 2011 and the show cause notice refers to this audit only. The notice, therefore, should have been issued within one year from the relevant date and there is no good reason as to why the Central Excise Officer should have waited till March 19, 2015 to issue the show cause notice. The extended period of limitation, for this reason alone, could not have been invoked. It cannot be said that the appellant had suppressed any information with intent to evade payment of tax - Appeal allowed - decided in favor of appellant. Issues Involved:1. Invocation of the extended period of limitation under section 11A(4) of the Central Excise Act.2. Compliance with rule 6 of the CENVAT Credit Rules, 2004.3. Maintenance of separate books of accounts for dutiable and exempted goods.4. Submission of statutory forms and returns (ER-5, ER-6, ER-7).Detailed Analysis:1. Invocation of the Extended Period of Limitation:The primary issue addressed in the appeal was the invocation of the extended period of limitation under section 11A(4) of the Central Excise Act. The appellant argued that the show cause notice issued on March 19, 2015, was beyond the permissible one-year period from the relevant date (October 10, 2011). The Tribunal examined the provisions of section 11A(1) and (4) of the Excise Act, which allow for an extended period of five years only in cases involving fraud, collusion, wilful mis-statement, or suppression of facts with intent to evade duty.The Tribunal referred to several Supreme Court judgments, including Pushpam Pharmaceuticals Company vs. Collector of Central Excise, Bombay, Anand Nishikawa Co. Ltd. vs. Commissioner of Central Excise, Meerut, and Continental Foundation Joint Venture vs. Commissioner of Central Excise, Chandigarh, to emphasize that suppression of facts must be deliberate and with intent to evade duty. The Tribunal concluded that the Department failed to demonstrate any deliberate suppression or intent to evade duty by the appellant. The extended period of limitation was thus deemed inapplicable.2. Compliance with Rule 6 of the CENVAT Credit Rules, 2004:The appellant was engaged in the manufacture of both dutiable goods (UPS systems) and exempted goods (Solar Power Systems). The Audit Team raised objections regarding non-compliance with rule 6 of the 2004 Credit Rules, which mandates maintaining separate accounts for dutiable and exempted goods or paying an amount equivalent to 5% of the value of exempted goods. The appellant contended that it either did not avail CENVAT Credit on inputs for exempted goods or reversed the credit suo moto before the audit inspection.3. Maintenance of Separate Books of Accounts:The show cause notice alleged that the appellant did not maintain separate books of accounts for dutiable and exempted goods, as required under rule 6(3) of the 2004 Credit Rules. The appellant argued that it had maintained separate records and had reversed any inadvertently availed CENVAT Credit. The Tribunal noted that the Department did not provide sufficient evidence to prove non-maintenance of separate records.4. Submission of Statutory Forms and Returns:The show cause notice also mentioned the non-submission of statutory forms ER-5, ER-6, and ER-7 for the financial year 2010-11, which was interpreted as an intent to evade duty. The appellant contended that the Department was aware of its practices and had not independently gathered any new information. The Tribunal found that the mere non-submission of these forms did not constitute suppression of facts with intent to evade duty.Conclusion:The Tribunal concluded that the extended period of limitation could not be invoked as there was no deliberate suppression of facts or intent to evade duty by the appellant. Consequently, the impugned order dated May 31, 2018, passed by the Commissioner (Appeals) was set aside, and the appeal was allowed. The Tribunal did not find it necessary to consider submissions on the merits of the order due to the resolution of the limitation issue.Order Pronounced on 03.11.2021.