2009 (3) TMI 668 - AT - Central Excise

Summary

Issues:
1. Applicability of Cenvat Credit Rules 2001 on re-imported goods.
2. Duty liability on goods removed as inputs under Rule 3(4) of Cenvat Credit Rules 2001.
3. Validity of demand for duty under Central Excise Act, 1944.
4. Limitation period for issuing show cause notice.

Analysis:
1. The appellant, engaged in manufacturing rubber rolls and other products, exported goods for an international exhibition under ARE 1 without duty payment. Upon re-importation, Customs valued the goods higher than the declared value. The appellant availed Cenvat credit and paid duty upon removal of the goods as inputs. The issue revolved around the application of Cenvat Credit Rules 2001 on re-imported goods and the subsequent duty liability.

2. The Superintendent of Central Excise sought explanations regarding the transaction, leading to a show cause notice for duty payment under Rule 8 of Central Excise Rules 2001. The demand was based on an assessable value higher than the declared value, resulting in a duty demand with interest and penalty. The Tribunal noted the duty payment upon removal of goods as inputs under Rule 3(4) of the Cenvat Credit Rules 2001, emphasizing the importance of compliance with duty payment regulations.

3. Despite arguments on the merits, the Tribunal set aside the demand primarily on the grounds of limitation. It was observed that the goods were initially cleared for the exhibition without duty payment, and the department was aware of the facts through correspondence. The value adopted for duty calculation was marginally higher than the declared value, with a 15% addition under Rule 8. The demand was confirmed under Section 11A(1) of the Central Excise Act, 1944, without invoking the Proviso to Section 11A, leading to a discussion on suppression for penalty imposition but not for the extended period under Section 11A.

4. The Tribunal allowed the appeal on limitation, highlighting that the department was aware of the clearance facts and could not issue a show cause notice beyond the limitation period. The discussion focused on the absence of suppression regarding clearance facts for invoking the extended period under Section 11A, ultimately leading to the appeal's allowance based on the limitation aspect.