2014 (3) TMI 1087 - AT - Central Excise

CENVAT Credit - input - Furnace Oil used for generating steam for manufacturing Cakes and Pastries - demand barred by time limitation - Held that - the respondent informed to the department on 07.01.2003 through a letter that they are opting for CENVAT credit facility on furnace oil which in turn used for the manufacture of excisable as well as non-excisable items. When these facts are in the knowledge of the department SCN dated 16.06.2005 for the period January 2003 to May 2004 is barred by limitation as there is no suppression of facts on the part of the respondent - appeal dismissed - decided against Revenue.

Summary

Issues:
1. Denial of CENVAT credit on Furnace Oil used for manufacturing Cakes and Pastries.
2. Barred by limitation - Suppression of facts.

Analysis:
1. Denial of CENVAT Credit on Furnace Oil:
The case involved an appeal by the Revenue against an order where the Commissioner (Appeals) set aside the denial of CENVAT Credit on Furnace Oil used for generating steam in the manufacturing of Cakes and Pastries. The respondent, a 5 Star Hotel, informed the department about using Furnace Oil for steam generation for both excisable and non-excisable goods. The Revenue issued a show-cause notice invoking an extended period of limitation, but the Commissioner (Appeals) ruled in favor of the respondent, stating that there was no suppression of facts. The Revenue argued that the respondent had no case based on a decision of the High Court of Gujarat. However, the Tribunal upheld the Commissioner's decision, emphasizing that since the department was aware of the facts from the respondent's letter in 2003, the show-cause notice issued in 2005 was time-barred due to the absence of suppression of facts.

2. Barred by Limitation - Suppression of Facts:
The key issue of limitation and suppression of facts was crucial in this judgment. The Tribunal noted that the respondent had duly informed the department about the use of Furnace Oil for both excisable and non-excisable goods in 2003. As a result, the show-cause notice issued in 2005 for the period from January 2003 to May 2004 was considered time-barred due to the absence of any suppression of facts by the respondent. The Tribunal emphasized that since the facts were already known to the department, the demand made beyond the normal limitation period was unsustainable. Consequently, the Tribunal upheld the decision of the Commissioner (Appeals) and dismissed the Revenue's appeal, highlighting the importance of timely actions and the absence of suppression of material facts in such cases.

This detailed analysis of the judgment highlights the key issues of denial of CENVAT credit on Furnace Oil and the significance of the limitation period and suppression of facts in tax matters, providing a comprehensive understanding of the legal reasoning and outcome of the case.