2012 (7) TMI 114 - AT - Central Excise

Suppression of fact - cenvat credit on ineligible inputs, Light Diesel Oil - Held that - Appellant has clearly suppressed the fact that they were availing cenvat credit on an input which was specifically named in the definition of inputs and excluded from the list of inputs on which credit can be taken. When there is a specific exclusion on availment of input credit, the submission that there was no suppression of this fact just because there was no column in ER-1 or no specific requirement of intimating the department or submitting invoice, is not acceptable - Appellant cannot take shelter behind technicalities having availed the totally inadmissible and irregular credit knowing fully that credit was not available - suppression of fact has been correctly invoked and demand has been correctly confirmed and penalties have been correctly imposed - appeal is rejected

Summary

Issues:
1. Time-barred show cause notice
2. Allegation of suppression of facts
3. Availment of cenvat credit on ineligible inputs
4. Requirement of submission of invoices for cenvat credit
5. Ignorance of law as an excuse

Analysis:

1. Time-barred show cause notice:
The appellant argued that the show cause notice issued in December 2008 was time-barred. The advocate contended that since there was no statutory requirement for submitting invoices or indicating details of cenvat credit in the returns, the allegation of suppression of facts could not be sustained. He also highlighted that the omission was detected during an audit, and the appellant had availed the credit for Light Diesel Oil (LDO) after 2003 without noticing the amendment that made the credit unavailable. The appellant relied on various decisions to support the argument that the omission could not be considered as suppression of facts.

2. Allegation of suppression of facts:
The AR argued that ignorance of the law could not be an excuse, especially when the Rules clearly excluded LDO from being eligible for cenvat credit. The AR emphasized that the specific exclusion of LDO as an input for credit meant there was no excuse for the manufacturer to avail such credit. It was contended that suppression of facts existed, and therefore, the extended period for invoking penalties was justified.

3. Availment of cenvat credit on ineligible inputs:
The Tribunal found that the appellant had availed cenvat credit on LDO, which was specifically excluded from the list of inputs eligible for credit. Despite the absence of a specific requirement to submit details of credit availed on LDO, the Tribunal held that the appellant had suppressed the fact of availing credit on a clearly excluded input. The Tribunal emphasized that ignorance of the law could not be a defense, and the appellant should have sought clarification or informed the department about the inadmissible credit.

4. Requirement of submission of invoices for cenvat credit:
The Tribunal rejected the argument that the appellant was not required to submit details of credit availed on LDO in the form of invoices. It was held that the appellant's failure to inform the department about availing inadmissible credit amounted to suppression of facts and misdeclaration. The Tribunal emphasized that when there was a clear provision excluding an input from credit eligibility, suppression of the fact of availing such credit was established.

5. Ignorance of law as an excuse:
The Tribunal reiterated that ignorance of the law was not an excuse, especially when the inadmissibility of credit on LDO was clearly defined in the Rules. The Tribunal emphasized that allowing the appellant to escape penalties on technical grounds would be unfair to honest assesses who fulfill statutory obligations sincerely. Therefore, the Tribunal upheld the invocation of suppression of fact, confirmation of demand, imposition of penalties, and rejected the appeal.

In conclusion, the Tribunal held that the appellant's availing of cenvat credit on ineligible inputs, specifically excluded under the Rules, constituted suppression of facts, and penalties were rightly imposed. The Tribunal emphasized the importance of statutory compliance and rejected the appeal, upholding the impugned order.