2012 (12) TMI 936 - AT - Central Excise

Denail of CENVAT Credit - Duty demand - Bar of limitation - Held that - there were two views during the relevant period and therefore there is no ground for invocation of extended period for denying cenvat credit. Since in this case the entire period covered by show-cause notice is beyond one year, extended period cannot be invoked, and therefore, the appellants succeed on limitation - Decided in favour of assessee.

Summary

Issues:
1. Availment of cenvat credit on duty paid for repairs of induction furnace.
2. Validity of show-cause notice issued for demanding credit availed.
3. Consideration of limitation period for invoking extended period.
4. Interpretation of conflicting decisions regarding eligibility of cenvat credit on repair inputs.

Analysis:
1. The appellant availed cenvat credit on duty paid by the repairer for repairs of the induction furnace. The appellant treated the repaired goods as capital goods and availed 50% credit in the first year and the remaining in the subsequent year. The total credit availed was Rs.62,000.

2. Proceedings were initiated through a show-cause notice in December 2010, challenging the appellant's credit availed on repairs. The impugned order demanded the credit with interest and imposed penalties under Section 11AC of the Central Excise Act, 1944.

3. The tribunal considered the issue of limitation regarding the show-cause notice. The appellant argued that conflicting decisions existed during the relevant period, indicating uncertainty in the law. The appellant relied on a circular issued by the Board and decisions like Vandana Global Ltd. and Ambuja Cements Eastern Ltd. to support their position.

4. The tribunal acknowledged the existence of conflicting views on the eligibility of cenvat credit for repair inputs during the relevant period. Considering the uncertainty in the law and the absence of a clear position, the tribunal held that the extended period could not be invoked against the appellant. Consequently, the tribunal allowed the appeal, set aside the impugned order, and granted relief to the appellant.

This judgment emphasizes the importance of clarity and consistency in legal interpretations, especially when dealing with conflicting decisions. It highlights the significance of considering the prevailing legal landscape and the principle that an assessee cannot be faulted for acting on a reasonable belief based on favorable interpretations of the law.