2008 (10) TMI 641 - AT - Central Excise

Summary

Issues involved: Confirmation of duty against the appellants, denial of modvat credit, period of limitation for issuing show cause notice, setting aside of penalty under Section 11AC.

The judgment by the Appellate Tribunal CESTAT AHMEDABAD involved two appeals filed by the appellant and one by Revenue, arising from a common impugned order by the Commissioner (Appeals). The duty amounts of &8377; 8,41,394/- and &8377; 38,84,590/- were confirmed against the appellants, denying the benefit of modvat credit based on the duty paid by the input supplier. The Tribunal referred to various decisions, including M/s Hero Cycles Ltd. case, to establish that the credit cannot be varied at the recipient's end due to the duty assessed at the input supplier's end. The Tribunal held that denial of credit to the appellant was not justified based on these precedents.

Furthermore, the Tribunal noted that the period involved in the appeal was April-02 to March-05, while the show cause notice was issued beyond the normal limitation period as per Rule 15 of Cenvat Credit Rules. Considering the bonafide interpretation of the dispute and absence of malafide intent by the assessee, the Tribunal found that the demand was barred by limitation. Citing previous cases like Punjab Electricity Board and Mahindra & Mahindra Ltd., the Tribunal held that setting aside duty under Section 11AC indicated the extended period was not applicable in the absence of malafide, thus ruling the demand as barred by limitation.

Consequently, the impugned order was set aside, and both appeals filed by the assessee were allowed with consequential relief. In the case of Revenue's appeal against the setting aside of penalty by the Commissioner (Appeals), since the appellant's appeals were allowed, Revenue's appeal was rejected by the Tribunal.