2013 (4) TMI 436 - AT - Central Excise

Admissibility of credit Extended period of limitation penalty u/s 11AC - Appellant has not contested the issue on merits that credit is not admissible. Appellants agitating that extended period cannot be invoked and penalties cannot be imposed in this case as contrary judgments on admissibility of Cenvat credit on disputed items were existing during the relevant period. - Held that - In this case ITC Ltd. vs. CCE, Salem 2013 (1) TMI 555 this is an issue of interpretation as to whether the assessees are entitled to credit or not therefore, extended period of limitation is not invocable in view of this observation, demand is restricted to the normal period of limitation as discussed above. So far as imposition of penalty upon the appellant is concerned, it is observed that the issue of admissibility of Cenvat credit on disputed items was subject matter of litigation and several decisions were in favour of the litigants. Under these circumstances, no penalty under Rule 15(2) of the Cenvat credit Rule, read with Sec. 11AC of the Central Excise Act, 1944, is attracted in the present proceedings.

Summary

Issues involved:
Admissibility of input credit on specific items, applicability of extended period for invoking penalties.

Analysis:

Admissibility of input credit:
The appellant contested the demand for a specific period regarding the admissibility of input credit on items used in concrete foundation work and machinery support structures. The appellant did not dispute that the credit was not admissible based on the Larger Bench judgment of CESTAT. The appellant had paid the amount for the credit taken after a certain date but contested the demand for the period before that date.

Appellant's arguments:
The appellant argued that they believed the credit was admissible based on previous judgments. They cited cases to support their position, indicating their understanding of the legality of claiming credit on the disputed items. The appellant also contended that penalties should not be imposed in cases of interpretation disputes.

Revenue's argument and judgment:
The Revenue argued that the extended period should apply as the appellant continued to claim credit even after the amendment. However, the Tribunal found that the appellant had reversed the credit taken after the amendment, indicating a lack of intention to evade taxes. The Tribunal considered conflicting judgments during the relevant period and concluded that the extended period could not be invoked in this case.

Precedents and rulings:
The Tribunal referred to various judgments supporting the view that in cases of interpretation, the extended period of limitation should not be invoked. They highlighted a specific case where the issue of admissibility was subject to interpretation, leading to the waiver of penalties. The Tribunal emphasized that in situations where multiple decisions favored the litigants, penalties under the relevant sections were not warranted.

Conclusion:
The Tribunal allowed the appeal filed by the appellant based on the analysis of the arguments presented. They concluded that penalties should not be imposed due to the ongoing litigation and the existence of conflicting judgments on the admissibility of the input credit. The judgment highlighted the importance of considering the legal context and interpretations prevalent during the relevant period before invoking penalties.