2000 (7) TMI 319 - AT - Central Excise

Appellant wins appeal as court rules failure to file declaration not suppression

The appellant failed to file a declaration under rule 57G of the Central Excise Rules for certain inputs, resulting in the department claiming wrongful ... Demand - Limitation Issues:1. Failure to file declaration under rule 57G of Central Excise Rules for availing Modvat credit.2. Allegation of suppression and fraudulent practices by the department.3. Bar on limitation for the show cause notice.Issue 1 - Failure to file declaration for Modvat credit:The appellant manufactured various articles of Aluminium and Electrical Machinery equipments, availing Modvat credit under rule 57A of Central Excise Rules. However, they did not file a declaration under rule 57G for certain inputs, leading to the department's claim of wrongful Modvat credit availed. The department issued a show cause notice to recover the wrongly taken credit and impose penalties under relevant rules. The appellant argued that the failure to file the declaration did not amount to suppression, citing previous rulings. The department contended that the appellant's failure to file the declaration constituted suppression, justifying the extended period of limitation for issuing the notice.Issue 2 - Allegation of suppression and fraudulent practices:The department alleged that the appellant suppressed the usage of certain inputs by not filing the required declaration, leading to the wrongful availing and utilization of Modvat credit. The appellant argued that the department was aware of their Modvat intentions through other filings and that the failure to file the declaration did not constitute suppression. The judgment analyzed previous cases to determine the applicability of suppression in the present case, ultimately rejecting the appellant's contentions and upholding the department's claim of suppression and fraudulent practices.Issue 3 - Bar on limitation for the show cause notice:The crucial point of consideration was whether the show cause notice was barred by limitation. The judgment found in the affirmative, highlighting that the appellant had not filed the prescribed declaration for availing Modvat credit on specific inputs, leading to a suppression of facts. The judgment referred to specific paragraphs of previous cases to support the decision that the extended period under the proviso to Section 11A(1) of the Central Excise Act could not be attracted due to the lack of suppression as alleged by the department. Consequently, the show cause notice was deemed barred by limitation, leading to the setting aside of the impugned order and allowing the appeal with consequential relief, if any, according to law.