2014 (9) TMI 336 - HC - Central Excise

CENVAT Credit - Wrongful availment - Invocation of extended period of limitation - Whether the CESTAT has erred in holding that extended period of limitation is not available without ascertaining the presence of the ingredients specified in section 11A(4) of the Central Excise Act, 1944 - Held that - Tribunal ought to have specifically dealt with the grounds which had weighed with the Adjudicating Authority and the Commissioner (Appeals) in applying the extended period of limitation. Both the authorities have noted that the assessee had made a suppression of fact in regard to the material which was used while filing a declaration and availing Cenvat credit. Without displacing this basic finding of fact, the Tribunal ought not to have, in our view, disturbed the order which was passed - matter remanded back - Decided in favour of Revenue.

Summary

Issues:
1. Whether the extended period of limitation is available without ascertaining the presence of the ingredients specified in section 11A(4) of the Central Excise Act, 1944.

Analysis:
The case involved an appeal by the Revenue challenging an order of the CESTAT. The Revenue questioned whether the CESTAT had erred in ruling that the extended period of limitation was not available without verifying the requirements under section 11A(4) of the Central Excise Act, 1944. The dispute arose from the availing of Cenvat credit by the assessee on certain materials claimed to be capital goods. The Revenue contended that the assessee had wrongly availed of the credit, leading to the application of the extended period of limitation due to the non-submission of required statements despite reminders. The Adjudicating Officer found that the materials were not eligible for the credit, citing relevant case law. The Commissioner (Appeals) upheld this decision, emphasizing that the assessee had suppressed material facts by not declaring the items for availing credit.

The Tribunal, however, allowed the appeal of the assessee on the grounds that during the relevant period, there were decisions favoring the assessee, and the adverse ruling came later. The Tribunal held that the extended period of limitation would not apply. The Revenue argued that the Tribunal did not dispute the findings regarding the non-declaration of structural material by the assessee. The Tribunal's decision was supported by the assessee's counsel, stating that the matter was still pending before the Larger Bench of the Supreme Court.

The High Court observed that the Tribunal should have addressed the grounds considered by the lower authorities in applying the extended period of limitation. Without overturning the finding of fact regarding the suppression of material facts by the assessee, the Tribunal should not have disturbed the previous orders. Therefore, the High Court decided to set aside the impugned order and remanded the case back to the Tribunal for a fresh evaluation. The High Court clarified that all rights and contentions of the parties regarding the extended period of limitation and merits of the case were to be considered by the Tribunal. Consequently, the High Court did not address the formulated question of law and disposed of the appeal without costs.