2011 (2) TMI 776 - AT - Central Excise

Demand - Limitation - Manufacturers of sugar and molasses - the appellant on 27/1/05 had addressed a letter to the Assistant Commissioner, that the issue involved in the matter has been decided in their favour and, therefore, they may be allowed to recredit the amount which had earlier been debited at the instance of audit, that subsequently the appellant vide their letter dated 5/3/05 addressed to the Assistant Commissioner informed that the amount has been recredit in the RG-23C Pt. II account - It clear that the department was aware of the recredit entry and as such there is no suppression on the part of the appellant - He, therefore, pleaded that the demand is time barred and as such the Commissioner (Appeals) s order upholding the confirmation of Cenvat credit demand is not correct.

Issues:
1. Time bar on Cenvat credit demand.
2. Validity of recredit entry by the appellant.
3. Allegations of suppression of information by the appellant.
4. Applicability of the limitation period.

Analysis:

Issue 1: Time bar on Cenvat credit demand
The appellant contended that the demand is time-barred as the recredit entry was made before the issuance of the show cause notice. They argued that there was no evidence of suppression of relevant information by the appellant. The appellant also highlighted that they had informed the Assistant Commissioner about the recredit entry, indicating no intent to suppress information. The Tribunal agreed with the appellant, stating that the show cause notice did not invoke the extended period under proviso to Section 11A (1) of the Central Excise Act. As a result, the Tribunal held that the demand was time-barred, rendering the impugned order unsustainable.

Issue 2: Validity of recredit entry by the appellant
The appellant voluntarily paid the disputed amount but later sought recredit, claiming that the issue had been decided in their favor. The Department argued that the appellant should have filed a refund claim instead of taking suo moto credit. Citing a precedent, the Department contended that all refunds must be filed under Section 11B of the Central Excise Act. The Tribunal, however, noted that the Department was aware of the recredit entry made by the appellant and that there were no allegations of suppression in the show cause notice. The Tribunal concluded that the appellant had kept the department informed about the recredit, and thus, the longer limitation period was not applicable.

Issue 3: Allegations of suppression of information by the appellant
The Department argued that the appellant should have filed a refund claim instead of taking suo moto credit, emphasizing that such actions were impermissible. However, the Tribunal found that there were no allegations of suppression regarding the recredit entry in the RG-23C Pt. II account. The absence of such allegations in the show cause notice led the Tribunal to conclude that the appellant had not suppressed any relevant information.

Issue 4: Applicability of the limitation period
The Tribunal noted that the show cause notice did not invoke the extended period under proviso to Section 11A (1) of the Central Excise Act. Given that the appellant had informed the department about the recredit entry, the Tribunal held that the longer limitation period would not be available to the department. Consequently, the Tribunal deemed the show cause notice issued on 21/7/06 as time-barred and set aside the impugned order, allowing the appeal.

This detailed analysis of the judgment highlights the key legal issues, arguments presented by both sides, and the Tribunal's reasoning leading to the final decision in favor of the appellant.

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