2025 (7) TMI 1536

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....by the Assistant Commissioner dropping the proceedings initiated by the show cause notice dated 05.04.2021 issued to the appellant has been set aside and the appeal filed by the department has been allowed. 2. The appellant is engaged in the manufacture of Lithium Ion Battery/ Power Bank. It paid central excise duty and availed CENVAT credit on the inputs received. During the course of scrutiny of the financial records/documents and the ER-1 Return for the months of February, 2017 and March, 2017, it was noticed that the appellant had availed exemption against clearance of "parts of portable battery charger" in the month of February, 2017 and "housing and battery cell" in the month of March, 2017 and though the appellant had showed the a....

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....unts to suppression with an intention to evade payment of Central Excise Duty. 11.3 Had the Departmental audit not been conducted in respect of the financial records of the assessee, the facts with regard to non-reversal of cenvat credit under Rule 6(3) of CCR, 2004 on supply of exempted goods as detailed in audit memo dated 09.02.2021 would not have come to the notice of the department. 11.4 Therefore, it appears that the provisions of Proviso to Section 11A(4) of Central Excise Act, 1944 read with Section 73(1) of the Finance Act, 1994 are invokable and demand & recovery can be made for non-levy, short levy and non-payment of Central Excise duty for five years from the relevant date. In view of the above, Cenvat....

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....03.2016." (emphasis supplied) 6. The Assistant Commissioner, in the order dated 23.03.2023, accepted the contention of the appellant and held that the extended period of limitation could not have been invoked. The proceedings were, accordingly, dropped as the entire demand was covered by the extended period. The relevant portion of the order is reproduced below: "I now come to decide whether the demand raised by invoking extended period of limitation is proper or not. I find that the dispute relates to clearances made in February and March, 2017, whereas the SCN has been issued on 5/4/2021. It has been alleged that there is non-disclosure of relevant notification details in the ER1 for February 2017 in regard to clearan....

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....it becomes apparent that the Notification, the benefit of which has been sought by the respondent and by virtue of which the final goods attained the status of exempted goods was issued more than a year before the final clearances made by the respondent. It is not a case where any notification has been issued subsequently, on the contrary, the said notification was very much available on public domain and within the knowledge of the respondent. When the said notification was in vogue since 01.03.2016, any Cenvatable inputs procured afterwards for the manufacture of those goods which by virtue of the applicability of the said notification fall under the category of exempted goods, will attract the provisions of Rule 6(3) of the CENVAT Credit....