2023 (9) TMI 717 - AT - Central Excise

Tribunal rules in favor of appellant, setting aside interest and penalties

M/s. Gripsurya Re-cycling LLP Versus Commissioner of Central GST and Central Excise, Indore

M/s. Gripsurya Re-cycling LLP Versus Commissioner of Central GST and Central Excise, Indore - TMI Issues Involved:1. Extended period of limitation under section 11A.2. Principle of revenue neutrality.3. Demand of interest.4. Imposition of penalty under section 11AC.Summary:Extended Period of Limitation:The appellant contested the demand on the grounds of limitation, arguing that they had filed the ER-1 returns and had not suppressed any information. The Commissioner (Appeals) upheld the extended period of limitation, asserting that the appellant had not accepted their relationship with GRP and failed to correctly determine the duty liability, amounting to wilful suppression of facts. The Tribunal, however, found that the appellant's contestation of audit observations cannot be a ground to presume wilful suppression. The Tribunal emphasized that the responsibility for scrutiny of returns lies with the officers, and any failure to detect undervaluation within the normal period of limitation is a fault of the officers, not the appellant.Principle of Revenue Neutrality:The appellant argued that the entire exercise was revenue neutral since the duty paid was available as CENVAT credit to its parent company. The Commissioner (Appeals) held that the assessee must pay duty as required under law, irrespective of the buyer's eligibility for CENVAT credit. The Tribunal agreed with this principle but highlighted that revenue neutrality is relevant for determining the intention to evade payment of duty, which is crucial for invoking the extended period of limitation.Demand of Interest:The appellant contested the demand of interest on the grounds that the demand itself was not sustainable. The Tribunal set aside the demand for interest, aligning with its decision on the limitation issue.Imposition of Penalty:The appellant also contested the imposition of penalty under section 11AC. The Tribunal, finding no evidence of wilful suppression or intent to evade duty, set aside the penalties imposed.Conclusion:The Tribunal concluded that the entire demand was beyond the normal period of limitation and thus unsustainable. The impugned order was set aside, and the appeal was allowed with consequential relief to the appellant.