2008 (11) TMI 547 - AT - Central Excise

Demand - Limitation - Cenvat/Modvat - Held that - There is no dispute about excess payment and non-recovery of the same from their buyer. As such I am of the view that no mala fide can be attributed to the appellant in which case issuance of show cause notice in 2006 for the credit availed in 2001 has to be held as barred by limitation - appeal allowed.

Summary

Issues:
1. Validity of availing CENVAT credit based on a photocopy of own invoice.
2. Time limitation for issuance of show cause notice for excess duty paid.

Issue 1: Validity of availing CENVAT credit based on a photocopy of own invoice:

The appellants, engaged in manufacturing pesticides, issued a credit note to a consignee for a rate difference in finished goods and claimed CENVAT credit based on a photocopy of their own invoice. A show cause notice alleged that the credit was taken on the basis of an invalid document. The appellants explained that they had overpaid duty due to a calculation error and rectified it by issuing a credit note to the buyer. The original adjudicating authority upheld the demand, stating the photocopy was not valid. The Commissioner (Appeals) also rejected the appeal. However, the Tribunal noted that the show cause notice was issued beyond the period of limitation, as the audit objection was in Feb. 2004, and the notice was issued in March 2006. Referring to precedent, the Tribunal held that the demand cannot be sustained when there was no intention to evade duty or conceal facts. Given the absence of mala fide intent and the non-recovery of excess payment from the buyer, the Tribunal concluded that the notice issued in 2006 for credit availed in 2001 was time-barred. Consequently, the impugned order was set aside, and the appeal was allowed in favor of the appellant.

Issue 2: Time limitation for issuance of show cause notice for excess duty paid:

The critical aspect of this issue revolved around the period of limitation for issuing a show cause notice regarding the alleged excess duty paid by the appellants. The Tribunal emphasized that the notice issued in 2006 for the credit availed in 2001 was beyond the statutory time limit. Citing a relevant precedent, the Tribunal highlighted that in the absence of any intention to evade duty or misrepresent facts, the demand could not be sustained. The Tribunal's analysis focused on the timeline of events, noting the response to the audit objection in 2004 and the subsequent show cause notice in 2006. By considering the lack of mala fide intent on the part of the appellants and the absence of recovery from the buyer, the Tribunal concluded that the notice issued after the statutory period was barred by limitation. This finding led to the setting aside of the impugned order and the grant of relief to the appellant.

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