2011 (2) TMI 1080 - AT - Central Excise

Cenvat credit - appellants transferred capital goods under job work, no credit reversed - SCN issued alleging fraud, collision, mis-statement, etc. - Held that - It is admitted fact that the capital goods were moved from unit No.1 to unit No.2, it is also admitted fact that in the earlier round of litigation it was held by this Tribunal that it is a matter of interpretation of statute and the allegation of fraud, collision, mis-statement, suppression of facts, etc., and it was not an intent to evade duty are not sustainable. As these facts were brought by the appellants before the Commissioner (Appeals), who did not consider this submission at all larger period is not invocable in the facts of this case - demands confirmed by the impugned orders are set aside and the appeals are allowed with consequential relief.

Issues:
Challenging duty, interest, and penalties under Central Excise law regarding the transfer of capital goods between two units, reversal of credit, alleged fraud, collusion, misstatement, suppression of facts, and penalties imposed.

Detailed Analysis:

1. Transfer of Capital Goods and Reversal of Credit:
The appellants challenged the duty, interest, and penalties under the Central Excise law related to the transfer of injection moulding machines from Unit No.1 to Unit No.2. The transfer was done following the procedure laid down in the Cenvat Credit Rules, 2004. Initially, no credit on these capital goods was reversed by Unit No.1 at the time of transfer. However, after a show-cause notice was issued, Unit No.1 reversed the credit and issued invoices to Unit No.2. Subsequently, Unit No.2 took credit based on these invoices. The Tribunal had previously confirmed the demand for the reversal of credit but observed that there was no intention to evade duty, hence no penalty was imposed.

2. Allegations of Fraud and Collusion:
A show-cause notice was issued to Unit No.2 for wrong availment of credit on the invoices issued by Unit No.1. The department alleged that as there was no movement of goods against these invoices, Cenvat Credit was not available to Unit No.2. The department further alleged fraud, collusion, misstatement, suppression of facts, etc. The demands were confirmed along with interest and penalties. A penalty was also imposed on Unit No.1 under the Central Excise Rules, 2002.

3. Appeal and Arguments:
The appellants appealed before the Tribunal against the adjudication order confirmed by the Commissioner (Appeals). The appellants argued that the demands against Unit No.2 were barred by limitation and not sustainable on merits. They contended that the extended period was not invocable as there was no fraud or contravention of law with an intent to evade duty. The appellants maintained that the goods were transferred under the job work challan as per the rules, and the credit taken by Unit No.1 was correct.

4. Tribunal's Decision:
The Tribunal considered the submissions of both sides and found that the capital goods were indeed transferred from Unit No.1 to Unit No.2. It noted that in a previous litigation, it was held that the matter was a mere interpretation of statute and not an attempt to evade duty. The Tribunal emphasized that the allegations of fraud, collusion, misstatement, etc., were not sustainable. It further highlighted that the show-cause notice was issued beyond the statutory period of one year, making the larger period not invocable. Consequently, the demands confirmed by the impugned orders were set aside, and the appeals were allowed with any consequential relief.

In conclusion, the Tribunal ruled in favor of the appellants, setting aside the demands and penalties imposed, based on the lack of intent to evade duty and the statutory limitations on the show-cause notice.

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