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2009 (8) TMI 931 - AT - Central Excise100% EOU - irregular availment of CENVAT credit - N/N. 2/95 dated 4-1-1995 - extended period of limitation - Held that - the extended period of limitation is not available to the department for the reason that they were admissible under bona fide belief and, therefore, could not be held guilty of suppression with intention to evade payment of duty. The requantification of duty payable within the normal period of limitation alone is required to be carried out by the adjudicating authority to whom we have already remitted the case - No requantification is called for, for the period beyond the normal period of limitation. Application disposed off.
Issues:
1. Availment of CENVAT credit on inputs received from 100% EOU. 2. Irregularity in availing credit at a flat rate of 16% adv. 3. Disallowance of wrongly availed credit. 4. Imposition of penalty. 5. Interpretation of Notification No. 2/95 dated 4-1-1995. 6. Decision of the larger Bench of the Tribunal in Vikram Ispat v. CCE - 2000 (120) E.L.T. 800. 7. Method for determining MODVAT credit from 100% EOU. 8. Adjudication by the Assistant Commissioner. 9. Decision of the Commissioner (Appeals). 10. Appeal by the Revenue. 11. Remand of the case for re-determination of credit admissible. 12. Cross objection regarding the extended period of limitation. 13. Bona fide belief in availing credit. 14. Suppression with intention to evade payment of duty. Analysis: The judgment revolves around the irregular availment of CENVAT credit by the respondents on inputs received from a 100% EOU at a flat rate of 16% adv., contrary to the provisions of Notification No. 2/95 dated 4-1-1995. The show-cause notice issued proposed disallowance of wrongly availed credit and imposition of penalty, which was confirmed by the Assistant Commissioner but with dropped penal proceedings. The Commissioner (Appeals) held the respondents eligible for credit based on the larger Bench decision in Vikram Ispat. The appellate tribunal noted that the credit availed exceeded 16% adv. and remanded the case to the Assistant/Deputy Commissioner for re-determination of the credit admissible, following the method outlined in the larger Bench decision. The judgment highlighted the importance of adhering to the method prescribed for determining MODVAT credit from a 100% EOU, emphasizing the need to ascertain the actual duty paid by the EOU and restricting the credit to the extent of duty equal to the additional duty leviable on like goods. The lower appellate authority was criticized for not applying the method laid down in the larger Bench decision while allowing the credit to the respondents. The tribunal directed the adjudicating authority to conduct the necessary re-determination after providing a reasonable opportunity for the respondents to present their case. Regarding the cross objection, the tribunal accepted the contention that the extended period of limitation was not applicable as the credit was taken under a bona fide belief, citing the decision in Pepsico India Holdings Ltd. v. Commissioner of Central Excise, Mumbai-II. The adjudicating authority was instructed to only requantify the duty payable within the normal period of limitation, with no requirement for requantification beyond that period. The cross objection was allowed based on the acceptance of the bona fide belief in availing the credit and the absence of intention to evade payment of duty.
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