2011 (1) TMI 742 - AT - Central Excise

Penalty - Demand for reversal of the credit - Limitation - Taken Cenvat Credit on capital goods upon the duty paying documents in November, 2007 - It is his submission that the amounts sought to be reversed was in fact time barred - Credit was availed in November, 2007 while show-cause notice was issued on 24/2/2009 - Assessee submit that the show-cause notice has not invoked the proviso to Section 11A or proviso to Rule 15 of the Cenvat Credit Rules i.e. to say, that there was no allegation of suppression, mis-statement or fraud in availment of credit - Assessee had filed monthly returns with the authorities and no queries were raised by the authorities - As per the judgment of the Hon ble Supreme Court in the cases of Kaur & Singh Vs. Collector 11996 -TMI - 44645 - SUPREME COURT OF INDIA , appeal is decided in favour of assessee.

Summary

Issues:
Time bar for reversal of Cenvat Credit based on duty paid on capital goods received and transferred between units.

Analysis:
The appeal involved a dispute regarding the reversal of Cenvat Credit on duty paid for capital goods received by Unit No.1 and later transferred to Unit No.2. The lower authorities had confirmed the demand for reversal along with penalties and interest, which was upheld by the Commissioner(Appeals), leading to the appeal. The main contention raised was the time bar for the reversal of credit, as the credit was availed in November 2007, but the show-cause notice was issued on 24/2/2009. The appellant argued that the notice did not invoke the provisos related to suppression, misstatement, or fraud in availing the credit, citing relevant case laws to support their position.

The appellant further contended that since the components and spares were transferred within the same financial year on payment of duty, the credit should not be disallowed. The Departmental Representative reiterated the findings of the Commissioner(Appeals) during the proceedings. Upon considering the submissions and perusing the records, the Tribunal focused on the issue of time bar in this case. It was noted that the appellants regularly filed monthly returns with the authorities, and there were no queries raised regarding the credit availed on capital goods in November 2007.

The Tribunal observed that the show-cause notice did not allege suppression, fraud, or collusion by the assessee in availing the credit, making it time-barred as per the relevant provisions. Citing judgments of the Hon'ble Supreme Court in similar cases, the Tribunal concluded that the impugned orders by the lower authorities were incorrect and illegal. Therefore, the Tribunal set aside the demands for reversal, penalties, and interest, allowing the appeal with consequential relief. The judgment was pronounced and dictated in open court, emphasizing the importance of adherence to statutory timelines in such matters.