2011 (11) TMI 629 - AT - Central Excise

Time limitation - wrong availment of credit - whether proviso to Section 11A (1) of CEA, 1944 would be invoked keeping in view the facts of the case that there is no allegation that wrong availment of Cenvat credit took place on account of wilful misstatement, suppression of fact etc., on the part of the assessee? - Held that - the SCN does not make any allegation of misstatement or deliberate contravention of the provisions of the CEA, 1944 or of the Rules made thereunder with intent to payment of duty and, as such, the proviso to Section 11A (1) has not been invoked. In the order-in-original passed by the Assistant Commissioner simply confirms the demand without considering the aspect of limitation, though in course of hearing, this point had been raised. Even the para 2 of the SCN mentions that the alleged wrong availment of Cenvat credit had been detected by the audit on the basis of the records produced by the respondent - also, there was bonafide doubt about excisability of the goods due to divergent views of the High Courts, extended period of 5 years could not invoked - Cenvat credit demand is hit by limitation - appeal dismissed - decided against Revenue.

Summary

Issues:
1. Eligibility of Cenvat credit for MS Angles, Channels, Beams, Joists used in assembly, erection, and installation of the main platform for Kiln.
2. Time bar for raising Cenvat credit demand.
3. Interpretation of capital goods and inputs under Cenvat Credit Rules, 2004.

Analysis:

Issue 1: Eligibility of Cenvat credit for specific items
The dispute revolved around whether the respondent, as manufacturers of Sponge Iron, were entitled to Cenvat credit for MS Angles, Channels, Beams, Joists used in the Kiln platform. The department contended that these items did not qualify as inputs or capital goods, thus challenging the Cenvat credit claimed. The Assistant Commissioner upheld the demand for Cenvat credit repayment, along with interest and a penalty. However, the Commissioner (Appeals) reversed this decision, citing the absence of the extended period under Section 11A (1) and set aside the order.

Issue 2: Time bar for raising Cenvat credit demand
The Revenue filed an appeal against the Commissioner (Appeals) order, arguing that the items in question were used for fabrication and erection of the Kiln platform, not meeting the criteria for capital goods or inputs. The Departmental Representative relied on legal precedents to support the Revenue's position, emphasizing the structure's fixed nature. In contrast, the respondent's counsel defended the Commissioner (Appeals) decision, asserting that the Kiln platform was essential and should be considered an accessory, eligible for Cenvat credit. They referenced relevant judgments to support their stance.

Issue 3: Interpretation of capital goods and inputs
Upon careful consideration of both sides' arguments and the case records, the Technical Member found that the demand for Cenvat credit was time-barred due to the absence of allegations of deliberate contravention or misstatement in the show cause notice. The Technical Member highlighted conflicting Tribunal judgments on the eligibility of certain items for Cenvat credit, emphasizing the need for clarity in legal interpretations. The Member concluded that the demand was not sustainable due to the limitation period and dismissed the Revenue's appeal, citing the lack of merit.

In summary, the judgment addressed the specific issue of Cenvat credit eligibility for certain items used in the Kiln platform, the time bar for raising the demand, and the interpretation of capital goods and inputs under the Cenvat Credit Rules, 2004. The Technical Member's decision emphasized the importance of legal clarity and adherence to procedural requirements in tax matters.