2008 (12) TMI 482 - AT - Central Excise

Demand - Limitation - Section 11A of the Central Excise Act - holding that the demand for the irregular credit availed by way of issuing a show cause notice beyond the normal period of limitation is barred by limitation

Summary

Issues:
1. Validity of demand raised on respondents for irregular Cenvat credit availed on capital goods.
2. Applicability of extended period for invoking demand based on IT returns depreciation claim.
3. Contention regarding intention to evade duty and limitation period for demand.
4. Cross-objection by respondents on merits of appeal and comparison with similar cases.

Issue 1:
The judgment dealt with the validity of the demand raised on the respondents for irregular Cenvat credit availed on capital goods. The Commissioner (Appeals) vacated the demand, noting that the respondents rectified the error in claiming depreciation on the value of capital goods involving excise duty. The Commissioner found that the respondents rectified the mistake voluntarily, acting bona fidely without any intention to evade duty. Consequently, the demand invoking a larger period of limitation under Section 11A of the Central Excise Act was deemed unsustainable, leading to the demand and penalty being vacated.

Issue 2:
The appeal by the Revenue contended that the extended period could be validly invoked as the respondents had claimed depreciation in their IT returns contrary to their declaration under Rule 57T. The Revenue relied on a previous Tribunal decision to support their argument. However, the judgment dismissed the appeal, emphasizing that the respondents voluntarily withdrew the depreciation claim in their revised IT return, indicating no intention to benefit from both depreciation and Cenvat credit simultaneously. The demand beyond the normal limitation period was considered barred by limitation.

Issue 3:
Regarding the contention of intention to evade duty and the limitation period for the demand, the judgment highlighted that the respondents' voluntary withdrawal of the depreciation claim in the revised IT return demonstrated their lack of intention to derive benefits from both depreciation and Cenvat credit simultaneously. The finding that the respondents did not have such intention was upheld, and the demand for irregular credit availed was deemed barred by limitation, further dismissing the appeal.

Issue 4:
The cross-objection by the respondents claimed that the Commissioner should have allowed their appeal on merits. The respondents' withdrawal of the inadmissible depreciation claim in the IT return absolved them of the charge of simultaneously availing the benefit of capital goods credit and claiming depreciation. The judgment supported this claim, citing a similar case where the demand of Cenvat credit and penalty were vacated. The cross-objection was allowed, providing relief to the respondents based on the merits of the case and comparison with relevant precedents.

This detailed analysis of the judgment showcases the considerations made by the Tribunal regarding each issue raised, ultimately leading to the dismissal of the appeal by the Revenue and the allowance of the cross-objection by the respondents.