2014 (9) TMI 451 - HC - Central Excise

Cenvat / Modvat Credit - extended period of limitation - Whether allowing of Modvat Credit by the Customs, Excise & Service Tax Appellate Tribunal on inputs which were used in repairing of old transformers and which did not suffer any Central Excise Duty is correct as per Cenvat Credit Rules, 2004 - Held that - A show cause notice was issued to the assessee on 3 May 2005 invoking the extended period of limitation for the recovery of the balance amount of CENVAT credit which had been utilised by the assessee on the use of transformer oil. The pure finding of fact is that the matter had been taken up for audit in 2002. The show cause notice which was issued on 3 May 2005 was clearly barred by limitation when the relevant facts were to the knowledge of the Department, as stated in the order of the Tribunal. That apart, the Tribunal noted that in the grounds of appeal, the findings of the Commissioner (Appeals) have not been displaced. We have extracted in the earlier part of this judgment the question of law as framed by the revenue. Even in the present appeal, the revenue has not framed a proper question of law, since the only issue which arose was in regard to the applicability of the extended period of limitation. Be that as it may, we see no reason to interfere in the order of the Tribunal - Decided against Revenue.

Summary

Issues: Appeal by revenue challenging Customs, Excise and Services Tax Appellate Tribunal's order allowing Modvat Credit on inputs used in repairing old transformers without Central Excise Duty. Tribunal dismissing appeal by revenue, confirming Commissioner (Appeals) order, and holding extended limitation period under Central Excise Act not attracted.

Analysis:
1. Extended Period of Limitation: The Tribunal dismissed the revenue's appeal, affirming the Commissioner (Appeals) decision that the extended limitation period under Section 11-A of the Central Excise Act, 1944 was not applicable. The show cause notice issued in May 2005 for recovering CENVAT credit utilized by the assessee on transformer oil was found to be time-barred. The Tribunal highlighted that the matter had been audited in 2002, and the notice issued in 2005 was beyond the limitation period. The Tribunal also noted that the grounds of appeal did not displace the Commissioner (Appeals) findings, emphasizing that the revenue failed to frame a proper question of law, limiting the issue to the applicability of the extended limitation period.

2. Proper Framing of Question of Law: The judgment criticized the revenue for not formulating a proper question of law, as the sole issue revolved around the extended limitation period. Despite the revenue's question regarding Modvat Credit, the Court found no reason to interfere with the Tribunal's decision. The Court emphasized that the revenue's failure to raise a relevant question of law hindered their appeal, ultimately leading to the dismissal of the case without costs.

In conclusion, the High Court dismissed the revenue's appeal challenging the Tribunal's decision to allow Modvat Credit on inputs used in repairing old transformers without Central Excise Duty. The Court upheld the Tribunal's ruling that the extended limitation period was not applicable, emphasizing the revenue's failure to raise a proper question of law as a key factor in the dismissal of the appeal.