2015 (11) TMI 1550 - AT - Central Excise

Cenvat credit - allowability - Cenvat credit taken prior to the receipt of goods - utilised Cenvat Credit not available on the date of utilisation - appellant deposited interest for 2 days on the Cenvat amount and intimated to the revenue on 16/9/11 prior to issue of the SCN - Held that - so far invoice number 95 dated 25/9/07 is concerned, there is no material alteration in the gate register or on the body of the invoice. Accordingly the demand relating to this invoice is set aside along with the penalty imposed. So far the demand relating to Cenvat Credit for invoice numbers 50 and 51 dated 27/6/07 is concerned I find that the modvat Stamp is affixed in a different place in spite of there being space available at the usual place and secondly I find that there is material alteration in the gate register both in the serial number as well as the date in entry number 288 and 289. Thus manipulation is writ large on the face of the record. Thus, the demand in respect of invoice number 50 and 51 is upheld. Period of limitation - Held that - in such cases of manipulation and/deliberate avoiding the tax liability, I hold that extended period of limitation is available. Accordingly, the demand is held to be within time. - Decided partly in favour of appellant with consequential relief

Summary

Issues Involved:
- Disallowance of Cenvat credit prior to receipt of goods
- Manipulation in records to avoid excise duty payment
- Time bar for demand confirmation

Analysis:

Issue 1: Disallowance of Cenvat credit prior to receipt of goods
The appellant took Cenvat Credit on invoices dated 27/6/2007 and 25/9/2007, claiming goods were received on 30/6/2007 and 29/9/2007 respectively. The revenue alleged manipulation in records to avoid cash payment of excise duty. The appellant argued that the credit could have been utilized later and deposited interest on the amount before the show cause notice (SCN) was issued. The order-in-original disallowed the credit and imposed a penalty. The Commissioner (Appeals) upheld the decision, citing manipulation in records and invoking the extended period for demand confirmation.

Issue 2: Manipulation in records to avoid excise duty payment
The appellant presented evidence regarding the invoices and gate register entries to refute the allegations of manipulation. The appellant claimed that discrepancies in records were due to the transporter's actions, not deliberate manipulation. The appellant also argued that the demand should be time-barred as the proviso to section 11A was not invoked in the order-in-original. However, the Tribunal found material alterations in the gate register and modvat stamp placement, indicating manipulation. The demand related to certain invoices was set aside, while for others, manipulation was upheld, and the extended period of limitation was deemed applicable.

Issue 3: Time bar for demand confirmation
The appellant contended that the demand should be time-barred due to the absence of invoking the proviso to section 11A in the order-in-original. The Tribunal held that in cases of deliberate manipulation to avoid tax liability, the extended period of limitation applies. Consequently, the demand was considered within the time limit for confirmation. The appeal was allowed in part, granting the appellant consequential benefits.

This judgment highlights the importance of maintaining accurate records and the consequences of attempting to avoid tax liability through manipulation. It also clarifies the application of the extended period of limitation in cases involving deliberate actions to evade tax obligations.