2014 (3) TMI 163 - AT - Central Excise

Availment of CENVAT Credit - Penalty u/s 11AC - Invocation of extended period of limitation - Held that - On perusal of the ER-1 returns, it is seen that the appellant had mentioned availment of the CENVAT credit on angles, channels, plates etc. with the supplier s name. It is noted that the appellant availed the credit during the period December 2007 to April 2009, when there was a dispute regarding the eligibility of CENVAT credit on these items - it is clearly apparent that there was a dispute of eligibility of credit on the items and the appellant declared these items in their ER-1 return. - if there is a conflicting opinion of Benches of Tribunal due to which it cannot be said that CENVAT credit wrongly taken or in contravention of provision of rules, no penalty can be imposed under Section 11AC - I modify the impugned order insofar as the demand of duty for the extended period of limitation and the penalty are set aside and the demand of duty for the normal period is upheld - Decided partly in favour of assessee.

Summary

Issues:
CENVAT credit on capital goods, denial of credit, suppression of facts, extended period of limitation, conflicting decisions on eligibility of credit, imposition of penalty.

Analysis:

1. CENVAT Credit on Capital Goods:
The case involved the appellants availing CENVAT credit on MS Angles, Channels, and Plates used for fabricating support structures for overhead cranes. The dispute arose regarding the eligibility of such credit under the CENVAT Credit Rules, 2004. The Tribunal, following precedents, held that the appellants were not entitled to avail CENVAT credit on these items used for fabricating fixed support structures.

2. Suppression of Facts and Extended Period of Limitation:
The Revenue argued that the appellants suppressed facts by not disclosing the usage of these items for supporting machinery structures, leading to a clear case of intent to evade payment of duty. The Commissioner (Appeals) upheld the demand of duty for the extended period of limitation, considering the lack of disclosure in the ER-1 returns as proof of non-compliance with statutory obligations. The Revenue relied on various decisions to support their stance, emphasizing the importance of disclosing relevant information to avoid contravention of rules.

3. Conflicting Decisions and Imposition of Penalty:
The appellant's counsel highlighted conflicting decisions where some tribunals allowed credit on similar items used for machinery support structures. The counsel argued that the issue was debatable, citing cases where penalties were set aside for wrong availment of CENVAT credit. The Tribunal noted the conflicting opinions and emphasized that the appellant declared these items in their returns, indicating a bona fide belief in their eligibility for credit. The Tribunal ultimately set aside the demand of duty for the extended period and the penalty, upholding the demand for the normal period.

In conclusion, the judgment addressed the core issues of CENVAT credit eligibility, suppression of facts, extended limitation periods, conflicting decisions, and penalty imposition. The Tribunal's decision was based on a thorough analysis of the facts, statutory obligations, and precedents, ultimately providing clarity on the disputed matters and ruling in favor of the appellant on certain aspects while upholding the demand for duty for the normal period.