2011 (7) TMI 348 - AT - Central Excise

Cenvat credit - Inputs (MS angles) used in factory - The issue was decided by the Larger Bench of the Tribunal in the case of Vandana Global Ltd. 2010 -TMI - 76147 - CESTAT, NEW DELHI (LB) , there were decisions taking a view that credit on M.S. angles, channels, beams, pipes etc. used as structurals in the factory was admissible - The fact that there were Tribunal decisions taking a view that cenvat credit on MS angles, channels, beams, pipes etc. was admissible during the relevant period till the decision of the Larger Bench was rendered, extended period invoking mis-declaration or suppression cannot be invoked - Accordingly the appeal has to be allowed on the ground of limitation even that the same fails on merit - Decided in favour of assessee.

Summary

Issues: Admissibility of cenvat credit on MS angles used in factory; Validity of demand for wrongly taken cenvat credit; Imposition of penalty; Invocation of extended period based on suppression of facts.

Analysis:
1. Admissibility of Cenvat Credit: The appellants had taken cenvat credit of central excise duty paid on MS angles used in their factory. The issue arose regarding the admissibility of this credit as the MS angles were considered to be in the form of structurals. This led to the initiation of proceedings resulting in the confirmation of a demand for wrongly taken cenvat credit along with interest and imposition of a penalty equal to the demanded amount.

2. Validity of Demand and Penalty: The advocate for the appellants argued that although the demand related to a specific period, the show cause notice was issued at a later date. He highlighted that until a decision by the Larger Bench of the Tribunal in a related case, there were precedents supporting the admissibility of credit on items like MS angles used as structurals. Citing previous Tribunal decisions, the advocate contended that the extended period should not have been invoked based on deliberate suppression or misdeclaration since there were precedents favoring the appellants.

3. Invocation of Extended Period: The judgment acknowledged that the decision of the Larger Bench went against the appellants on merits, a fact accepted by the advocate. However, considering the existence of Tribunal decisions supporting the admissibility of cenvat credit on items like MS angles until the Larger Bench's decision, the extended period could not be invoked based on suppression of facts. Consequently, the appeal was allowed on the ground of limitation, even though it failed on merit. The appellants were granted consequential relief based on this finding.

This detailed analysis of the judgment from the Appellate Tribunal CESTAT, Ahmedabad, underscores the key issues of admissibility of cenvat credit, validity of demand and penalty, and the invocation of the extended period based on suppression of facts. The decision provides a nuanced understanding of the legal principles involved in the case and the rationale behind allowing the appeal on the ground of limitation despite the unfavorable merit decision.