2011 (3) TMI 983 - AT - Central Excise

Penalty - Cenvat credit - The appellants had taken wrong cenvat credit of Rs.1,51,899/- on 01.07.2001 on the basis of own invoices of the rejected material as per Rule 16(1) of Central Excise Rules, 2001 - Further, the appellants accounted the rejected material in their RG-1 register on 19.06.01 as waste and scrap - The show cause notice was issued, as a result of audit objection on 29.06.06 i.e. much beyond the normal period of limitation - Commissioner (Appeals) has not accepted the appellant s plea of limitation on the ground that they have not filed any D-3 intimation about the receipt of rejected goods - However, find that in as much as due entries were made in Part-I and Part-II of RG 23A, it cannot be held that there was any malafide, suppression or mis-statement on the part of the appellant - The notice having been raised beyond the normal period of limitation is barred - Decided in favour of assessee.

Summary

Issues:
1. Wrong cenvat credit availed by the appellant.
2. Show cause notice issued beyond the normal period of limitation.
3. Contestation of the case on merits and limitation by the appellant.
4. Adjudication of demand, penalty, and interest under relevant sections.

Analysis:

Issue 1: Wrong cenvat credit availed by the appellant
The case involved the appellant availing a wrong cenvat credit of Rs.1,51,899/- on 01.07.2001 based on own invoices of rejected material. The rejected material was accounted for as waste and scrap on 19.06.01. A show cause notice was issued, leading to the demand for central excise duty, penalty imposition, and interest recovery under the Central Excise Act.

Issue 2: Show cause notice issued beyond the normal period of limitation
The appellant contested the case on merits and limitation, highlighting that the goods were received on 19.06.01, and the credit was availed on 01.07.01. Entries were duly made in the RG-23A Part-I and Part-II Registers. The show cause notice was issued much beyond the normal period of limitation, raising concerns about the validity of the notice.

Issue 3: Contestation of the case on merits and limitation by the appellant
The appellant's advocate contested the case on both merits and limitation. Despite the Commissioner (Appeals) not accepting the limitation plea due to the lack of D-3 intimation about the receipt of rejected goods, it was argued that the entries made in the statutory records reflected the bonafides of the appellant. The advocate emphasized the absence of malafide, suppression, or mis-statement on the part of the appellant.

Issue 4: Adjudication of demand, penalty, and interest under relevant sections
The impugned order confirmed the demand for central excise duty, imposed a penalty, and ordered interest recovery under the Central Excise Act. However, the Tribunal, after considering the entries in the statutory records and the absence of malafide intent, set aside the impugned order and allowed the appeal solely on the ground of the show cause notice being issued beyond the normal period of limitation.

This detailed analysis of the judgment before the Appellate Tribunal CESTAT, Ahmedabad, highlights the key issues, arguments presented, and the ultimate decision rendered in favor of the appellant based on the limitation aspect.