2014 (7) TMI 107 - AT - Central Excise

CENVAT Credit - denial of credit since the matter settles by settlement commission applying the provision of Rule 9(1)(b) - whether duty can be held as paid due to suppression of facts - manufacture of Asceptic Packings - Non fulfillment of export obligation - import of excess inputs as permitted in licence - Held that - Matter has been settled by the Settlement Commission which was not in dispute. Thereafter, no adjudication took place to prove the charge of suppression. This case is squarely covered by the decision of Indian Oil Corporation (2011 (6) TMI 520 - CESTAT, MUMBAI) wherein this Tribunal has held that as adjudication did not take place therefore, the allegation of suppression of facts inconclusive. In these circumstances, the assessee is entitled to take CENVAT Credit of duty paid. The facts of the case in hand are similar to the facts of the case of Indian Oil Corporation Ltd. (supra). Therefore, I hold that the respondents are entitled to take the CENVAT Credit of the duty paid - Decided against Revenue.

Summary

Issues:
- Appeal against allowing CENVAT Credit
- Allegation of suppression of facts
- Settlement Commission's role in the case

Analysis:
1. Appeal against allowing CENVAT Credit:
The Revenue appealed against the order where the Commissioner (Appeals) allowed the CENVAT Credit availed by the respondent. The issue arose from the respondent's failure to fulfill export obligations and importing excess inputs duty-free. The Revenue contended that the respondents suppressed facts by not fulfilling obligations and importing excess inputs. The appeal was based on Rule 9(1)(b) of the Cenvat Credit Rules, 2004, which states that credit cannot be availed if there is fraud, collusion, willful misstatement, suppression of facts, or contravention of rules to evade duty. The Revenue argued that due to suppression of facts, the respondents should not be entitled to take CENVAT Credit.

2. Allegation of suppression of facts:
The Revenue argued that the respondents suppressed facts by failing to fulfill export obligations and importing excess inputs. The Revenue claimed that if an investigation had not been conducted, the suppression of facts would not have been revealed. The charge of suppression of facts was considered proven by the Revenue, leading to the argument that the respondents should not be allowed to take CENVAT Credit.

3. Settlement Commission's role in the case:
The respondents settled the case before the Settlement Commission, where they agreed to pay duty but received immunity from fines and penalties. The Settlement Commission's decision was crucial in this case as it was argued that since no adjudication took place after the settlement to confirm the charge of suppression of facts, the respondents should be entitled to take the CENVAT Credit of duty paid. The Tribunal relied on a previous decision regarding inconclusive allegations of suppression of facts when adjudication did not take place, supporting the respondents' entitlement to the credit.

In conclusion, the Tribunal upheld the decision of the Commissioner (Appeals) to allow the CENVAT Credit for the respondents. The Tribunal found that since the matter was settled before the Settlement Commission and no adjudication took place to prove suppression of facts, the respondents were entitled to take the CENVAT Credit of the duty paid. The appeal filed by the Revenue was dismissed, and the impugned order was upheld based on the Settlement Commission's role and the lack of conclusive evidence of suppression of facts.