Appeal allowed as show cause notice deemed time-barred. Commissioner upheld demand, set aside penalty.

The appeal centered on whether a show cause notice proposing a demand for Cenvat credit, interest, and penalty was time-barred. The Commissioner (Appeals) upheld the demand but set aside the penalty. The Appellant argued they had not suppressed facts and cited precedents supporting their position. The Member (Judicial) found the Appellant's actions to be bonafide, with no evidence of fraud or suppression. Consequently, the show cause notice was deemed time-barred, and the appeal was allowed. The Appellant was granted relief based on the limitation issue, with the impugned order set aside.

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Issues:
- Whether the show cause notice is hit by limitation.

Analysis:
The appeal involved the issue of whether the show cause notice was barred by limitation. The Appellant, engaged in manufacturing two-wheelers, imported inputs and capital goods for production, availing benefits under the Duty Entitlement Pass Book (DEPB) Scheme. The Department objected to the Appellant availing Cenvat credit on duty payment made through DEPB debit entries, leading to a show cause notice (SCN) dated 20.09.2007 proposing a demand for Cenvat credit, interest, and penalty. The Appellant's reply was filed on 22.10.2007. The demand was later confirmed by the Deputy Commissioner in an Order-in-Original dated 28.08.2018, prompting the Appellant to appeal before the Commissioner (Appeals).

The Commissioner (Appeals) upheld the Order-in-Original on merits and limitation but set aside the penalty. The Appellant then appealed against this decision. The Appellant contended that they were a registered manufacturer, maintained proper records, and regularly filed returns. They argued that there was no specific requirement to inform the Department about the mode of CVD payment. The show cause notice alleged intentional suppression of facts, invoking the extended period of limitation.

The Appellant cited the Precision Pipes and Profiles Ltd. case where non-disclosure of CVD payment mode in returns did not amount to fraud or suppression. They also referred to rulings allowing Cenvat credit for CVD paid through DEPB. The Revenue relied on the impugned order. The Member (Judicial) observed that the Appellant maintained proper accounts, filed returns regularly, and there was no allegation of non-filing or suppression in returns. The SCN was based on information from the Appellant's records. The Member found the Appellant's credit of CVD paid through DEPB to be bonafide, citing decisions by Delhi and Punjab & Haryana High Courts.

Consequently, the Member held that the show cause notice was time-barred, lacking suppression or fraud. The appeal was allowed, the impugned order set aside, and the Appellant entitled to consequential relief as per the law. The decision was pronounced in open court, granting relief to the Appellant based on the findings regarding the limitation issue.

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