2012 (10) TMI 165 - HC - Central Excise

Demand of duty, interest and penalty limitation - manufacture of Ice-Cream - Cenvat credit of duty paid on prefabricated (construction) building (cold room) consisting of wall, roof, door, flashing window, on an assumption that they are required to manufacture final products alleged that wrong availment of credit Held that - Initiation of proceedings is barred by time - In the returns it is clearly mentioned that they availed credit under the aforesaid rules. The audit partly accepted the same. It is only in the second audit that they noticed the mistake and initiated proceedings - in the light of the aforesaid facts none of the other conditions prescribed in the Proviso exists in this case to extend the period of limitation of 5 years - Tribunal was justified in setting aside the order passed by the appellate authority and in restoring the order passed by the original authority in favor of assessee

Summary

Issues:
1. Appeal by Revenue challenging Tribunal's order based on limitation period.
2. Availment of Cenvat credit on prefabricated building for manufacturing Ice-Cream.
3. Dispute over the initiation of proceedings within the limitation period under Section 11A.
4. Tribunal's decision based on the limitation period and the correctness of the initiation of proceedings.

Issue 1:
The appeal was filed by the Revenue challenging the Tribunal's order, which allowed the appeal filed by the assessee solely on the ground that the initiation of proceedings was barred by the law of limitation.

Issue 2:
The assessee, engaged in manufacturing Ice-Cream, availed Cenvat credit of duty paid on a prefabricated building (cold room) to freeze the Ice Cream under specific temperatures. The Revenue authorities initially did not raise any queries regarding this credit during audits conducted between May 2003 to August 2004.

Issue 3:
The Revenue contended that the initiation of proceedings on 25-9-2007, after noticing the credit discrepancy in September 2004, was within the 5-year limitation period as per Section 11A of the Central Excise Act. The provision allows for a one-year period for recovery of dues, extendable to five years in cases involving fraud, suppression of facts, or contravention of laws to evade duty payment.

Issue 4:
The High Court analyzed that since the returns were filed promptly by the assessee, mentioning the availed credit, and the mistake was noticed in a subsequent audit, the conditions for extending the limitation period under the proviso of Section 11A were not met. Therefore, the Tribunal's decision to set aside the appellate authority's order based on the limitation period was deemed justified. Consequently, the High Court dismissed the Revenue's appeal, upholding the Tribunal's decision.

This judgment delves into the intricacies of Cenvat credit availed by an Ice-Cream manufacturer on a prefabricated building for freezing purposes. The dispute primarily revolves around the initiation of proceedings by the Revenue within the limitation period prescribed under Section 11A of the Central Excise Act. The High Court's detailed analysis emphasized the importance of timely compliance and the specific conditions under which the limitation period could be extended. Ultimately, the Court upheld the Tribunal's decision, highlighting the significance of adherence to statutory provisions in excise matters.