2024 (6) TMI 176 - AT - Central Excise

Revenue fails to prove wilful suppression for extended limitation under Section 11A proviso

The CESTAT Allahabad allowed the appeal, ruling that the extended period of limitation could not be invoked against the appellant. The Revenue failed to ... Invocation of extended period of limitation - suppression of fact - denial of CENVAT Credit under Rule 2(l) which are taken in relation to manufacturing & clearance of final products. Invocation of extended period of limitation - suppression of facts - HELD THAT:- In the case of Surya Vistacom Pvt. Ltd. [2021 (11) TMI 339 - CESTAT KOLKATA] Tribunal has held that 'the details have been culled out by the adjudicating authority from the available records and there is no new or fresh tangible materials available in the hands of the adjudicating authority to make out a case of wilful misstatement or wilful suppression. Therefore, the Tribunal was fully justified in holding that the extended period of limitation could not have been invoked.' In case of Meghmani Dyes & Intermediates Ltd. [2013 (6) TMI 141 - GUJARAT HIGH COURT] it was held that To make the demand for duty sustainable beyond the period of six months and upto a period of five years in view of the proviso to Section 11A of the Act, the Revenue is obliged to establish by cogent evidence that the duty of excise has not been levied or paid or short-levied or short-paid or erroneously refunded by reasons of either fraud or collusion or wilful mis-statement or suppression of facts or contravention of any provision of the Act or rules made thereunder, with intent to evade payment of duty. As the demand has been made invoking extended period of limitation and it is not found that the same is available to Revenue for making this demand. The impugned order cannot be sustained on this ground itself. Denial of CENVAT Credit - HELD THAT:- As the demand is barred by limitation, the question of admissibility of credits on merits not discussed. Appeal allowed. Issues Involved:1. Whether the department can invoke the extended period of limitation on the ground of suppression of fact.2. Whether Cenvat credit for input services can be denied u/s Rule 2(l) of the Cenvat Credit Rules, 2004.Summary:Issue 1: Extended Period of LimitationThe department issued a show cause notice on 11.02.2016, alleging that the Appellant had willfully suppressed facts to avail inadmissible Cenvat credit on service tax paid for commission charges to M/s Chopra Properties. The adjudicating authority disallowed the credit and imposed penalties, invoking the extended period of limitation u/s 11A(4) of the Central Excise Act, 1944. The Commissioner (Appeals) upheld this decision, stating that the Appellant had suppressed facts with the intent to avail inadmissible credit. The Appellant argued that all required information was provided timely in their ER-1 returns and that the extended period of limitation could not be invoked as there was no deliberate suppression of facts. The Tribunal found that the Appellant had disclosed the credit details in their ER-1 returns, and the Revenue failed to raise the dispute within the prescribed period. The Tribunal referred to several cases, including Surya Vistacom Pvt. Ltd., Meghmani Dyes & Intermediates Ltd., and L.G. Electronics India Pvt. Ltd., to conclude that mere non-payment of duties does not equate to willful suppression. The Tribunal held that the extended period of limitation was not applicable as the Revenue did not prove any deliberate suppression or misstatement by the Appellant.Issue 2: Admissibility of Cenvat CreditThe Appellant claimed Cenvat credit on service tax paid for commission charges to M/s Chopra Properties, arguing that the services were used in relation to the manufacture of goods and thus qualified as input services u/s Rule 2(l) of the Cenvat Credit Rules, 2004. The adjudicating authority disallowed the credit, stating that it was inadmissible. The Appellant relied on various judicial decisions, including Mercedes Benz Research and Development India Pvt. Ltd. and Citicorp Services India Pvt. Ltd., to support their claim. However, the Tribunal did not discuss the merits of the case regarding the admissibility of credits, as the demand was already found to be barred by limitation.Conclusion:The Tribunal allowed the appeal, setting aside the impugned order on the ground that the demand was barred by limitation. The Tribunal did not address the merits of the case regarding the admissibility of Cenvat credit.