2023 (10) TMI 644 - AT - Central Excise

Tribunal allows Cenvat credit use for duty payment, finding show cause notice time-barred

The Tribunal ruled in favor of the appellant, finding that the show cause notice issued beyond the normal time limitation was barred due to the absence of ... Utilisation of CENVAT credit for payment of countervailing duty - de-bonding of 100% EOU - liability to pay excise duty on clearance to DTA (not customs duty) - limitation - extended period and absence of suppression/mis declaration - no dues certificate and prior declaration to revenue - parity and administrative precedentUtilisation of CENVAT credit for payment of countervailing duty - liability to pay excise duty on clearance to DTA (not customs duty) - de-bonding of 100% EOU - parity and administrative precedent - Payment of countervailing duty at the time of de-bonding of a 100% EOU can be discharged from accumulated CENVAT credit and is not a prohibited use of credit. - HELD THAT: - The Tribunal accepted that the appellant, a 100% EOU exiting the scheme, computed and declared dues and discharged liabilities by utilising CENVAT credit, and the department had issued a no dues certificate which was relied on by the Development Commissioner for de bonding. The Tribunal held the question of using CENVAT credit for countervailing duty was not res integra and relied on High Court authority recognising parity where other similarly situated units were permitted to discharge excise liabilities from CENVAT credit. The Tribunal further treated the applicable liability on clearance to DTA as excise duty (not a customs demand) and noted statutory and regulatory provisions and judicial precedent that permit CENVAT credit of countervailing duty to be accounted for in excise liability. On these bases the Tribunal concluded the appellant was entitled to utilise accumulated CENVAT credit to meet the countervailing duty obligation at de bonding and allowed the appeal on merits. [Paras 5, 6]Appeal allowed on merit: utilisation of accumulated CENVAT credit to discharge countervailing duty at de bonding upheld.Limitation - extended period and absence of suppression/mis declaration - no dues certificate and prior declaration to revenue - The demand raised by way of the show cause notice issued in 2015 is time barred because there was no suppression, mis declaration or intent to evade duty and the department had earlier issued a no dues certificate on the appellant's declared payments. - HELD THAT: - The Tribunal found that the appellant had made a detailed declaration to the proper officer regarding payment and utilisation of CENVAT credit and that the department had issued a no dues certificate on 13.10.2012. In those circumstances, there was no suppression or mis statement which would justify invocation of the extended period of limitation. The Tribunal relied on its earlier decisions and the reasoning that where the department was aware of the facts at the relevant time and raised no contemporaneous objection, subsequently invoking extended limitation without proof of fraud or suppression is unsustainable. Consequently, the demand raised by the show cause notice dated 15.07.2015 was held to be barred by limitation and liable to be set aside. [Paras 7, 8]Demand under the show cause notice is time barred and unsustainable; impugned order set aside on limitation grounds.No dues certificate and prior declaration to revenue - personal liability of authorised signatory - The contempt/penal charges against the authorised signatory and the separate appeal filed by him fail because the main charges in the show cause notice are unsustainable. - HELD THAT: - Given the Tribunal's conclusions that utilisation of CENVAT credit was permissible and that the demand was barred by limitation in the absence of suppression, the ancillary penal allegations and invocation of extended/penal provisions against the authorised signatory could not be sustained. The Tribunal therefore allowed the appeal filed by the authorised signatory on the same grounds as the main appellant. [Paras 9]Appeal of the authorised signatory allowed as the principal charges are unsustainable.Final Conclusion: The appeals are allowed: the appellant validly utilised accumulated CENVAT credit to discharge countervailing duty on de bonding of its 100% EOU; the subsequent demand raised by the show cause notice of 15.07.2015 is time barred in the absence of suppression; and the penal allegations against the authorised signatory likewise fail. Issues involved:The issues involved in the judgment are the applicability of time limitation for issuing a show cause notice, the utilization of Cenvat credit for payment of duty, and the validity of the demand raised by the department.Time Limitation Issue:The appellant argued that the show cause notice issued beyond the normal period of limitation is barred due to no suppression of facts or intention to evade duty. They highlighted that a no dues certificate was issued at the time of de-bonding the unit, including details of duty payment utilizing Cenvat credit, without any objection from the department. The argument was supported by the absence of misdeclaration or fraud, making the notice time-barred.Utilization of Cenvat Credit:The appellant, a 100% EOU unit, contended that they paid the counterveiling duty portion using Cenvat credit, permissible under the law. They emphasized their liability to pay excise duty under the Central Excise Act, not custom duty, supported by relevant legal provisions and judicial precedents. The Tribunal cited a case where similarly situated entities were allowed to discharge excise duty from Cenvat credit, establishing a precedent for such payments.Validity of Demand Raised:The Tribunal found in favor of the appellant, stating that the payment of counterveiling duty from accumulated Cenvat credit was correct. They also noted that the appellant had made a detailed declaration to the department regarding duty payment and Cenvat credit utilization, with a no-dues certificate issued subsequently. Allegations of suppression of facts or intent to evade duty were deemed absent, rendering the demand beyond the normal period unsustainable. The decision was further supported by a Tribunal ruling on the ground of limitation.Conclusion:The Tribunal held that the order-in-original lacked merit and was set aside, allowing the appeals of both the appellant and the Assistant Manager. The judgment emphasized the legality of utilizing Cenvat credit for duty payment and the absence of suppression of facts or misdeclaration. Both appeals were allowed, with the decision pronounced openly on a specified date.