2009 (2) TMI 489 - AT - Central Excise

Modvat credit - whether the appellants would be entitled to the benefit of Modvat credit in respect of fuel used in the manufacture of electricity, a part of which is sold to their sister concern - As per the Tribunal s decision in the case of M/s. SOLARIS (2007 -TMI - 1589 - SUPREME COURT OF INDIA), the benefit has already been denied. Limitation - Tribunal held the demand raised after the normal period of 6 months to be barred by limitation - The demand raised for the period April 2002 to March 2003 by way of show cause notice issued in April 2004 would be time barred by limitation, except for the period which falls within the limitation - The same is required to be quantified by authorities below - Appeal is disposed off in above manner.

Summary

Issues Involved:
Entitlement to Modvat credit for fuel used in electricity manufacture sold to sister concern; Barred by limitation - demand raised after 6 months.

Entitlement to Modvat Credit:
The issue at hand was whether the appellants were entitled to the benefit of Modvat credit for fuel used in the manufacture of electricity, a portion of which was sold to their sister concern. The advocate for the appellant acknowledged a similar issue addressed in a previous Tribunal case and the Supreme Court's decision in another matter where the benefit was denied. However, it was argued that the demand raised after the normal 6-month period should be considered time-barred. The advocate requested similar treatment, suggesting that a portion of the demand might fall within the limitation period.

Barred by Limitation - Demand Raised After 6 Months:
The Tribunal referred to a previous order in the case of M/s. Mafatlal Industries where it was noted that the Commissioner (Appeals) had granted the benefit to the respondents, but this decision could not be upheld based on the Supreme Court judgment. The Tribunal emphasized the need to examine the matter from a limitation standpoint. It was observed that the show cause notice was issued after the normal limitation period, and during the relevant period, decisions by the Larger Bench of the Tribunal and the Hon'ble Gujarat High Court favored the assessee. Therefore, it was concluded that there was no suppression or mala fide on the part of the respondents to justify invoking a longer period. Citing precedents, including cases of M/s. Reliance Industries and M/s. Ultratech Cements, it was held that while the Revenue's pleas succeeded on merits, they failed on limitation. Consequently, the appeal filed by the Revenue was rejected.

In conclusion, the Tribunal applied the ratio of the above-mentioned decision and determined that the demand raised for the period from April 2002 to March 2003, through a show cause notice issued in April 2004, would be time-barred by limitation, except for the period falling within the limitation, which needed to be quantified by the authorities below. The appeal was disposed of accordingly.