Excise duty paid via CENVAT credit during investigation under SVLDRS 2019 must be adjusted; denial set aside.

Whether excise duty paid during investigation by utilisation of CENVAT credit must be adjusted while determining the amount payable under the Sabka Vishwas (Legacy Dispute Resolution) Scheme, 2019 was the dominant issue. The HC held that the department's plea that such adjustment could be considered only by the adjudicating authority was untenable, and that the Scheme mandates adjustment of any amount deposited during enquiry/investigation, including duty discharged through CENVAT credit. The HC further held that denial of such adjustment could not be justified by invoking a one-year limitation. Consequently, the impugned SVLDRS-2 and SVLDRS-3 and the related departmental letter were set aside and the writ petition was allowed.

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Issues Involved:
Petition seeking quashing of SVLDRS-2 and SVLDRS-3, denial of Cenvat Credit on the ground of time limit, adjustment of excise duty paid through Cenvat Credit during investigation, application of Sabka Vishwas (Legacy Dispute Resolution) Scheme, 2019, and the admissibility of Cenvat Credit under the scheme.

The petitioners, a company engaged in the production of Ready Mix Concrete (RMC), sought relief from the denial of Cenvat Credit on the ground of time limit, specifically related to the investigation conducted by Central Excise officers and subsequent show cause notice issued for evasion of Central Excise Duty.

The petitioners submitted Cenvatable invoices for verification, with a portion of the credit disallowed on the technical ground that it was taken beyond the one-year registration limit, leading to the dispute over the admissibility of Cenvat Credit under the scheme.

Under the Sabka Vishwas (Legacy Dispute Resolution) Scheme, 2019, the petitioners made applications for immunity from penalty, which led to the issuance of SVLDRS-2 and subsequent rejection through SVLDRS-3, based on the contention that the duty paid through Cenvat Credit was not eligible for deduction under the scheme.

The respondents argued that the deposit made through Cenvat Credit does not qualify for adjustment under the scheme, citing provisions of the Cenvat Credit Rules and notifications specifying time limits for availing such credit, leading to a dispute over the interpretation and application of the rules in the present case.

The petitioners relied on previous judgments emphasizing the deduction of amounts paid during investigation or audit while issuing statements of amounts payable, rejecting the contention that the benefit of Cenvat Credit cannot be given for adjustment under the scheme, and highlighting the need for a fresh order considering all documents and records submitted by the petitioners.

The Court, after considering the arguments and precedents cited, set aside the impugned orders, directing the respondent to reevaluate the documents and records submitted by the petitioners, including proof of payment of Cenvat Credit, and to pass a fresh order in accordance with the law, providing an opportunity of hearing to the petitioners before the decision is made.

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