1999 (12) TMI 195 - AT - Central Excise

Tribunal rules in favor of appellants, finding denial of credit and penalty demand time-barred.

The Tribunal allowed the appeal in favor of the appellants, ruling that the demand for denial of Modvat credit and imposition of penalty was time-barred. ... Demand - Limitation - Modvat Issues:1. Availing Modvat credit with incomplete declarations.2. Denial of credit and imposition of penalty.3. Failure to produce records before the Collector.4. Claim of availability of documents after the impugned order.5. Consideration of the limitation aspect.6. Comparison with previous cases on the point of limitation.7. Verification of RG23A registers and audit history.8. Decision on the appeal based on limitation.Analysis:1. The appellants availed Modvat credit but faced a show cause notice seeking to deny credit amounting to Rs. 17,46,736.83 due to incomplete declarations of input details, contrary to the law's requirement of detailed descriptions. The Collector confirmed the short levy and imposed a penalty of Rs. 5,00,000/-, leading to the appeal before CEGAT.2. The appellants relied on a Board's letter allowing credit for pre-February 1988 cases if records showed proper receipt and utilization of inputs. The Tribunal remanded the matter for record examination, but the Collector, in the subsequent adjudication, reiterated the demand and penalty due to the appellants' failure to produce records.3. During the proceedings, the appellants claimed to have presented a significant volume of documents to the Collector, expressing surprise at the Collector's orders. Discrepancies arose regarding the Collector's reaction to the appellants' communication, with the Revenue contesting the claim of document submission.4. Despite the claim of document availability post the impugned order, the Tribunal found it doubtful that the appellants could not produce records when requested, considering their repeated claims of readiness to do so. The Tribunal contemplated re-remanding the matter but proceeded to decide the dispute due to elapsed time and the potential consideration of the limitation aspect.5. The appellants argued that previous Tribunal judgments favored them on the limitation issue concerning Modvat availability in similar cases, emphasizing the department's knowledge of relevant records through regular audits and returns filed.6. Comparing with past cases, where judgments favored the appellants on limitation grounds due to the department's access to relevant records, the Tribunal found merit in the appellants' claim that the demand in the present case was time-barred.7. Noting the verification of RG23A registers and the continuous audits conducted on the unit, the Tribunal accepted the appellants' argument that the department had sufficient knowledge of the Modvat details, supporting the decision that the demand was indeed barred by limitation.8. Ultimately, based on the grounds that the demand was time-barred, the Tribunal allowed the appeal, providing consequential relief to the appellants, thereby resolving the dispute in their favor.