2010 (12) TMI 478 - AT - Central Excise

Cenvat credit - The respondent had purchased the brake assemblies from M/s. Kalyani Brakes Ltd. - In order to avoid unnecessary transportation, the brake assemblies purchased by the respondent from M/s. Kalyani Brakes Ltd., were sent directly to M/s. Spicer India Ltd., Pune, the cenvat credit cannot be denied to the respondents as there is no dispute about the fact that the brake assemblies were ultimately received in the respondent s factory alongwith rear/front axles and were used in the manufacture of finished goods. Demand - limitation - there is nothing to indicate that the respondents had any intent to evade payment of duty by taking wrong cenvat credit - Do not find any infirmity in the impugned order - The Revenue s appeal is dismissed.

Summary

Issues:
1. Eligibility of the respondent for Cenvat credit on brake assemblies not physically received in their factory.
2. Time limitation for the department to demand duty payment based on intent to evade duty.

Issue 1:
The case involved a dispute regarding the eligibility of the respondent for Cenvat credit on brake assemblies purchased but not physically received in their factory. The respondent purchased brake assemblies from M/s. Kalyani Brakes Ltd., Jalgaon, which were then sent to M/s. Spicer India Ltd., Pune for fitting with rear/front axles supplied to the respondent. The department contended that since the brake assemblies were not physically received in the respondent's factory, they were not eligible for Cenvat credit. The Commissioner (Appeals) set aside the Modvat/Cenvat credit demand, stating that the respondent ultimately received the brake assemblies along with rear/front axles, making them eligible for the credit. The Appellate Tribunal agreed, emphasizing that the brake assemblies were used in the manufacture of finished goods, and the avoidance of unnecessary transportation did not negate the eligibility for Cenvat credit.

Issue 2:
Regarding the time limitation for the department to demand duty payment based on intent to evade duty, the Tribunal found that the demand was time-barred as there was no evidence to suggest that the respondent had any intent to evade payment of duty by taking incorrect Cenvat credit. The Tribunal agreed with the Commissioner (Appeals) that the longer period of limitation was not available to the department in this case. Consequently, the Tribunal dismissed the Revenue's appeal, upholding the decision that the respondent was eligible for Cenvat credit on the brake assemblies and that the demand was time-barred. The judgment was delivered on 8-12-2010 by the Appellate Tribunal CESTAT, New Delhi, with the operative portion already pronounced in open court.