2022 (8) TMI 492 - AT - Central Excise

Tribunal sets aside time-barred demand, dismisses excise duty claim due to lack of evidence and reversed credit

The Tribunal ruled in favor of the Appellant, setting aside the time-barred demand for the period 01.04.2009 to 31.03.2013 due to lack of evidence of ... Reversal of CENVAT Credit - Appellant has used common inputs for manufacture of dutiable goods as well as exempted goods - requirement to pay 8%/10% of the value of the exempted goods i.e. medical oxygen - extended period of limitation - HELD THAT:- The entire case has been made out by the Department on the basis of ER-1 returns. There is no allegation in the show cause notice that the Department was not aware about the manufacturing activity of the Appellant i.e. Industrial Oxygen and Medical Oxygen. It is further observed that apart from the general aversion in the show cause notice, there is no evidence to show that central excise duty has not been paid by resorting to fraud or suppression of facts with an intent to evade payment of duty. It is well settled law that onus is on the Department to prove that extended period of limitation is invokable by adducing evidence. In the present case, no such evidence has been adduced by the Department. As far as demand for the normal period is concerned, it is found that the Appellant has reversed the proportionate cenvat credit which has been availed in the manufacture of exempted goods - Hon’ble Supreme Court in the case of CHANDRAPUR MAGNET WIRES (P) LTD. VERSUS COLLECTOR OF C. EXCISE, NAGPUR [1995 (12) TMI 72 - SUPREME COURT] has held that the claim for exemption of duty on the disputed goods cannot be denied on the plea that the assessee has taken credit of the duty paid on the inputs used in manufacture of these goods. The impugned Order is not sustainable and the same is set aside - Appeal allowed - decided in favor of appellant. Issues involved:1. Time-barred demand for the period 01.04.2009 to 31.03.20132. Merits of the demand for central excise duty on common inputs used for dutiable and exempted goodsAnalysis:Issue 1: Time-barred demand for the period 01.04.2009 to 31.03.2013The Appellant contended that the demand is partially time-barred as the extended period of limitation cannot be invoked without evidence of suppression of facts or willful misstatement to evade duty payment. The Department's case was based on audit objections, and it failed to prove the suppression of facts required for invoking the extended period. Citing legal precedents, the Tribunal held that the Department must show deliberate default for the extended period to apply. As no evidence of willful default was presented, the demand for this period was deemed time-barred and set aside.Issue 2: Merits of the demand for central excise duty on common inputsRegarding the demand for the normal period, the Appellant had reversed the proportionate cenvat credit availed for manufacturing exempted goods, which was considered equivalent to not availing the credit. Legal precedents were cited to support this view, emphasizing that once credit is reversed, it signifies non-availment. The Tribunal referred to judgments such as Star Agri Warehousing and Collateral Management Ltd. and CCE Vs. Precot Meridian Ltd. to support the decision. As the Appellant had reversed the credit, the demand was set aside on the merits of the case. The Tribunal found the impugned order unsustainable and allowed the appeal with consequential relief.In conclusion, the Tribunal ruled in favor of the Appellant, setting aside the demand for the time-barred period due to lack of evidence of willful default and dismissing the demand for central excise duty on common inputs used for dutiable and exempted goods based on the reversal of cenvat credit. The appeal was allowed, and the impugned order was set aside with consequential relief granted.