2011 (12) TMI 446 - AT - Central Excise

Availment of CENVAT Credit - Suppression of facts - Invocation of extended period of limitation - Held that - though the plea of limitation was not raised by the party before the Adjudicating Authority, it was raised before the Appellate Authority. The learned Commissioner (Appeals) accepted the plea of the assessee. In the present appeal, it is not the case of the appellant that it was not open, in law, to the lower Appellate Authority to consider the plea of limitation raised for the first time. I have also found no fetter for the lower Appellate Authority in this regard. On a perusal of the relevant factual materials, I find that the relevant facts were supplied by the assessee to the Department way back in June 2006. Further, facts were supplemented in subsequent letters addressed to the Range Officer. Moreover, the auditors of the Department visited the factory of the respondent and gathered all the necessary facts in August 2007. Surprisingly, the show cause notice in this case came to be issued after one year from August 2007. In this scenario, there is no reason for this Tribunal to interfere with the decision of the lower Appellate Authority on the limitation issue. The Adjudicating Authority merely held that MS rounds, shells, channels, etc. did not fall within the ambit of the definition of input . That authority did not consider the above Explanation-2 to the definition. The Appellate Authority also did not advert to the said Explanation. It proceeded on the premise that the use of MS rounds etc. for the manufacture of chimneys and stoves was not properly verified by the Department. Both the lower authorities, apparently, sidestepped the relevant provision of law (Explanation 2 ibid) whereunder the benefit of Cenvat credit was claimed by the assessee. The impugned orders are liable to be set aside on this ground. It is ordered accordingly. However, in the nature of the dispute, the original authority should undertake de novo adjudication of the relevant show cause notices having regard to the relevant observations contained herein. The matters covered by Appeals E/1197 & 1198/2010 are remanded to the original authority for fresh decision in accordance with law and the principles of natural justice - Decided in favour of Revenue by way of remand.

Issues:
1. Grant of Cenvat credit for warehousing service.
2. Allegation of suppression of material facts.
3. Plea of limitation.
4. Denial and grant of Cenvat credit for specific items.
5. Interpretation of the definition of 'input' under Cenvat Credit Rules.

Issue 1: Grant of Cenvat credit for warehousing service
The Department appealed against the grant of Cenvat credit to the respondent for warehousing services provided by the Central Warehousing Corporation. The Department alleged that the credit was taken based on invalid documents and invoked the extended period of limitation. The original authority confirmed the duty demand and imposed a penalty, but the Commissioner (Appeals) allowed the respondent's appeal. The Department contended that the respondent suppressed facts to avail undue credit. The Tribunal noted that the plea of limitation was raised before the Appellate Authority, which accepted it. The Tribunal found that relevant facts were provided to the Department in 2006 and 2007, and the show cause notice was issued after a significant delay. The Tribunal upheld the decision of the lower Appellate Authority on the limitation issue, rejecting the Department's appeal.

Issue 2: Allegation of suppression of material facts
The Department alleged that the respondent suppressed facts to avail Cenvat credit on invalid documents. The respondent argued that all relevant facts were disclosed to the Department in 2006 and 2007. The Tribunal found that the facts were provided to the Department earlier, and the show cause notice was issued after a considerable delay. The Tribunal rejected the Department's appeal, upholding the lower Appellate Authority's decision on the limitation issue.

Issue 3: Plea of limitation
The plea of limitation was raised before the Appellate Authority, which accepted it. The Tribunal found that the relevant facts were supplied to the Department in 2006 and 2007, and the show cause notice was issued after a significant delay. The Tribunal upheld the decision of the lower Appellate Authority on the limitation issue, rejecting the Department's appeal.

Issue 4: Denial and grant of Cenvat credit for specific items
The Department appealed against the grant of Cenvat credit for specific items used in the manufacture of chimneys and stoves. The original authority denied the credit, citing lack of evidence of usage in chimney manufacturing. The Appellate Authority allowed the credit, stating that the Department did not verify the usage. The Tribunal found that both authorities did not consider the relevant provision of law regarding the definition of 'input.' The orders were set aside, and the matters were remanded to the original authority for fresh adjudication.

Issue 5: Interpretation of the definition of 'input' under Cenvat Credit Rules
The respondent claimed Cenvat credit for items used in the manufacture of capital goods like chimneys and stoves. They argued that these items qualified as 'inputs' under the Cenvat Credit Rules. The Adjudicating Authority and the Appellate Authority did not consider the relevant provision in the definition of 'input.' The Tribunal ordered a fresh adjudication considering the definition of 'input' and principles of natural justice, allowing the appeals by way of remand.

← Previous Next →