2015 (1) TMI 1212 - AT - Central Excise

Denial of CENVAT Credit - Capital goods - Commissioner held demand is time barred - Held that - Respondents had filed ER-1 returns and has also given the details of the credit taken even though it was not a statutory requirement during the relevant time. Further learned counsel also submitted the statement which shows the materials received, supplier s name and the usage of the same in the factory. Moreover I also find that the submission of the learned counsel that because of the views prevailing during the relevant time taken by different Benches of this Tribunal, the respondent could have entertained a bona fide belief regarding their eligibility. Under these circumstances for demanding the cenvat credit, extended period could not have been invoked even if a view is taken about non eligibility. There were contrary views finally settled by this Tribunal Larger Bench in the case of Vandana Global Ltd. Vs. CCE, Raipur 2010 (4) TMI 133 - CESTAT, NEW DELHI (LB) and hence extended period could not have been invoked - Since invocation of extended period in my opinion is not at all correct, I do not consider it appropriate that the matter should be remanded - Decided against Revenue.

Issues:
1. Availment of cenvat credit on MS Sheets, Plates, etc., for maintenance, repair, and expansion of factory.
2. Dispute regarding the eligibility of items under the definition of "capital goods."
3. Time-barred demand for cenvat credit availed from November 2004 to March 2007.
4. Imposition of penalty under Rule 15(1) and (2) of Cenvat Credit Rules.
5. Appeal against the Commissioner (Appeals) decision on time-barring of the demand.

Analysis:
1. The respondent availed cenvat credit on central excise duty paid on MS Sheets, Plates, etc., used for factory maintenance, repair, and expansion. A dispute arose regarding the eligibility of these items as "capital goods." The department initiated proceedings challenging the credit availed by the respondent.

2. The Revenue contended that the items were not covered under the definition of "capital goods," and hence, the credit should not have been availed. The learned AR argued that the respondent failed to furnish details of the actual usage of the goods, indicating suppression. It was further argued that the respondent could not have entertained a bona fide belief regarding the eligibility of these items as capital goods.

3. The Commissioner (Appeals) held that the demand was time-barred as the appellant had provided all details along with ER-1 returns within the stipulated period. However, the Revenue appealed against this decision, disputing the time-barring of the demand for the cenvat credit availed during the specified period.

4. A penalty was imposed on the respondent under Rule 15(1) and (2) of the Cenvat Credit Rules. The learned counsel for the respondent argued that the details of the actual usage of the materials were provided during the personal hearing, which had not been considered. The respondent justified the credit availed for maintenance, repair, and expansion activities.

5. The Tribunal considered the submissions from both sides and reviewed the records. It noted that the respondent had filed ER-1 returns and provided details of the credit taken, even though it was not mandatory at the time. The Tribunal also acknowledged the differing views on eligibility prevailing at the time, citing precedents where credits were allowed by different Tribunal Benches. Ultimately, the Tribunal rejected the appeal, emphasizing that the extended period for demanding the cenvat credit could not be invoked due to the bona fide belief held by the respondent regarding eligibility.

This detailed analysis of the judgment highlights the key issues surrounding the availment of cenvat credit, the eligibility of items as capital goods, the time-barring of the demand, the penalty imposed, and the decision on the appeal against the Commissioner (Appeals) ruling.

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