2010 (11) TMI 310 - AT - Central Excise

Demand - Limitation - Short payment/wrong availment of CENVAT credit - The impugned period is between 2005-06 and 2006-07 for which a show-cause notice has been issued on 16-7-2008 - The impugned order the Commissioner (Appeals) has clearly held that the extended period should not have been invoked since the assessee has been filing ER-1 returns regularly and alleged wrong availment of credit was on account of audit objection - These findings are not challenged by the department in this appeal - As per the case of CCE v. Spade Elektro (P) Ltd. the department has not challenged the findings of the lower appellate authority on limitation the same has attained finality - The appeal filed by the Revenue deserves no merits hence rejected.

Summary

Issues:
1. Correctness of input service credit taken by the respondent.
2. Applicability of the extended period in the case.
3. Challenge against the findings of the lower appellate authority on limitation.

Analysis:
1. The appeal was filed by the Revenue against an order where the input service credit taken by the respondent was deemed correct by the lower appellate authority. The respondent, engaged in manufacturing exempted products like rectified spirit, availed input service credit on goods transportation agency services for inputs used in manufacturing. The Revenue argued that the respondent should reverse the proportionate input service credit related to the production of exempted products. However, the learned Advocate for the respondent contended that the impugned order was passed on merits and limitation, with the Revenue not challenging the findings on limitation. The appeal was thus defended on this basis.

2. The impugned period in question was between 2005-06 and 2006-07, with a show-cause notice issued on 16-7-2008. The Commissioner (Appeals) had ruled that the extended period should not have been invoked as the alleged wrong availment of credit was due to an audit objection and not a deliberate act of evasion. The department did not challenge this aspect in the appeal. Citing a precedent, the judgment highlighted that when the department appeals only on merits and not on limitation, and the assessee succeeds on the limitation issue, the appeal is not maintainable. Therefore, since the department did not contest the findings on limitation, the impugned order was upheld, and the appeal by the Revenue was rejected.

3. The Tribunal's decision emphasized that when the alleged issue is discovered based on audit objections and not deliberate evasion, the extended period cannot be applied. The judgment underscored that the department's failure to challenge the lower appellate authority's findings on limitation led to the finality of the decision in favor of the respondent. By following established legal principles and precedents, the Tribunal concluded that the appeal lacked merit and was dismissed based on the principles of law and the specific circumstances of the case.