2012 (6) TMI 845 - HC - Central Excise

Summary

Issues involved: Interpretation of Rule 10(3) of Cenvat Credit Rules, 2004 and the applicability of limitation period in a tax appeal.

Interpretation of Rule 10(3) of Cenvat Credit Rules, 2004:
The main question in the appeal was whether the CESTAT was correct in allowing the credit transfer by the assessee without transferring the inputs as per Rule 10(3) of Cenvat Credit Rules, 2004. The Tribunal dismissed the appeal based on two grounds: limitation and the ineligibility of the appellants to claim credit transfer under Rule 10(3). The Tribunal noted that the demand was time-barred and that the department had accepted this fact. Additionally, the Tribunal observed that the denial of credit to the assessee was based on the availing of credit on waste and scrap, which was deemed ineligible as input or final product without proper justification.

Applicability of Limitation Period:
Regarding the issue of limitation, the Tribunal found that the demand in question was indeed barred by limitation. The show cause notice was issued to the appellant after a period of three years from the surrender of the license by M/s. GTCL and the grant of new registration to the appellant. The Tribunal emphasized that the Revenue was aware of the relevant facts during the exercise, making the notice issued in 2008 clearly time-barred. Consequently, the Tribunal dismissed the tax appeal solely on the grounds of the demand being time-barred, without delving into the question of credit transfer under Rule 10(3) of the Cenvat Credit Rules, 2004.

Conclusion:
Ultimately, the tax appeal was dismissed by the High Court, affirming the Tribunal's decision that the demand made by the department was time-barred. Therefore, the issue of credit transfer under Rule 10(3) of the Cenvat Credit Rules, 2004 was not considered, and the appeal was solely rejected based on the limitation aspect.