2024 (8) TMI 782 - AT - Central Excise

Recovery of CENVAT credit barred beyond normal limitation period without proper justification for extended period invocation

The CESTAT Chandigarh held that recovery of CENVAT credit cannot be pursued beyond the normal limitation period when extended period invocation lacks ... Invocation of extended period of limitation - Recovery of CENVAT Credit - recovery sought on the ground that the supplies were from manufacturers availing the benefit of N/N. 01/2010, which was not availed provided any exclusion under Rule 12 of Central Excise Rules, 2002 - HELD THAT:- It is found that the impugned Show Cause Notice has been issued invoking extended period; at the same time, the existence of the ingredients like mis-declaration, suppression, fraud etc. with intent to evade payment of duty is not established - the appellants had successfully placed on record the fact that the records of the appellant were being audited from time to time and that an endorsement to that effect has been made in the RG-1 Register. As submitted by the learned Consultant for the appellants, the Show Cause Notice refers to the audit of other units while being silent on the audit of the appellants themselves. Hon’ble Supreme Court held in the case of COMMISSIONER OF CENTRAL EXCISE BANGALORE VERSUS M/S. PRAGATHI CONCRETE PRODUCTS (P) LTD. [2015 (8) TMI 1053 - SC ORDER] that: it is also found as a matter of fact, that the unit of the respondent was audited during this period several times and there were physical inspections by the Department as well. Therefore, there could not be any case of suppression. It is found that in the instant case, the appellant has been submitting the invoices along with the refund claims from time to time; it is not the case of the Department that there is endorsement on any of the invoices issued by the eight suppliers to the effect that they are availing exemption under Notification No.01/2010. Moreover, it is on record that for some period, the said Notification remains to be listed under the exclusions under Rule 12; the same was restored by issue of Notification No.02/2014 dated 20.01.2014. Therefore, there are reasons for the appellants to entertain a bona fide belief that they are entitled for CENVAT credit. Under the circumstances, no case has been made for invocation of extended period - the impugned Show Cause Notice is barred by limitation and as such the impugned order is liable to be set aside. Appeal allowed. Issues:1. Recovery of CENVAT credit availed by the appellants under Notification No.56/2002.2. Consideration of written submissions by the Commissioner (Appeals).3. Time-barred issue regarding the invocation of the extended period.4. Audit conducted on the appellant's unit and its relevance.5. Interpretation of CENVAT Credit Rules and relevant circulars.6. Interpretation of the applicability of Notifications and benefits.7. Decision based on limitation without delving into the merits of the case.1. Recovery of CENVAT Credit:The appellants availed CENVAT credit under Notification No.56/2002 for inputs procured from manufacturers. The Revenue sought to recover the credit as the suppliers were under a different notification. The Show Cause Notice was confirmed, leading to the appeal.2. Consideration of Written Submissions:The appellant argued that the Commissioner (Appeals) did not consider their submissions during the personal hearing, which were crucial to the case. The failure to address these submissions was a key contention in the appeal.3. Time-barred Issue:The appellants claimed the issue was time-barred, citing regular refund claims and lack of disclosure requirements. They argued that no suppression or fraud was evident, and they were unaware of the suppliers' status under a different notification.4. Audit Relevance:The appellant highlighted the audit conducted on their unit and argued that the Show Cause Notice referred to audits on other units, not theirs. They relied on precedents to support their claim that the extended period cannot be invoked post-audit.5. Interpretation of Rules and Circulars:The appellant referenced cases and circulars to support their interpretation of CENVAT Credit Rules and the continuity of benefits under different notifications. They argued that the government did not intend to discriminate between regions.6. Applicability of Notifications:The Department reiterated the impugned order's findings, emphasizing that benefits cannot be extended retroactively. They relied on a previous bench order to support their stance on the applicability of notifications.7. Decision on Limitation:The Tribunal dismissed the appeal based on the limitation issue without delving into the case's merits. They found no evidence of suppression or intent to evade duty, ultimately setting aside the impugned order due to the time-barred nature of the Show Cause Notice.This comprehensive analysis covers the issues raised in the legal judgment, detailing the arguments presented by both parties and the Tribunal's decision on each aspect of the case.