2011 (2) TMI 1010 - AT - Central Excise

Denial of Modvat credit - extended period of limitation invoked - Appellants were working under the MODVAT Scheme and availed credit of duty paid in respect of capital goods and inputs during the period - invoking extended period - Held that - As per the provisions of Rule 57I of Central Excise Rules which deals in respect of credit wrongly availed or utilized, extended period of limitation is applicable where the credit has been taken on account of willful misstatement, commission or suppression of facts. In the present case as Appellants were filing regularly the monthly returns along with duty paying documents which were duly defaced and there is no dispute in this regard hence without going into the other issues the demand is liable to be set aside on the ground of time bar. In favour of assessee.

Summary

Issues:
1. Denial of credit and imposition of penalty under the MODVAT Scheme for the period 1994 to 1995.
2. Invocation of extended period of limitation on the ground of suppression with intent to evade payment of duty.

Analysis:
Issue 1: The Appellate Tribunal heard the appeal against the impugned order denying credit of Rs.2,92,760 and imposing an equal amount of penalty under the MODVAT Scheme for the period 1994 to 1995. The Appellants argued on merits as well as on time bar, contending that the credit was availed in compliance with the rules by filing monthly returns along with relevant documents. They asserted that the allegation of suppression with intent to evade payment of duty was not sustainable as they regularly submitted duty paying documents, duly defaced by the proper officer. The Tribunal found that the Appellants had followed the procedure correctly, and as there was no willful misstatement or suppression of facts, the demand was considered time-barred. Consequently, the impugned order was set aside, and the appeal was allowed.

Issue 2: The Revenue contended that the Appellants, being under the MODVAT scheme, were aware of the Central Excise Rules and had wrongly availed credit not admissible under the scheme. They argued that the extended period of limitation was rightly invoked due to the alleged wrongful credit taken by the Appellants. However, the Tribunal noted that the Appellants had consistently filed monthly returns along with duty paying documents, which were duly defaced as required. Since there was no dispute regarding this compliance, and no willful misstatement or suppression of facts was evident, the demand was deemed time-barred. Therefore, the Tribunal set aside the impugned order and allowed the appeal, ruling in favor of the Appellants.