2014 (9) TMI 477 - HC - Central Excise

Irregular use of Cenvat credit - Appellant removed imported capital goods as such and paid excise duty on the capital goods using Cenvat credit - lower authorities found that excise duty was paid using credit wrongly to transfer the same to its sister unit - appellants submitted that the demand was time-barred - Tribunal held claim as time barred - Held that - Court has scanned the entire order passed by the Appellate Authority and no mention has been made with regard to the said communication dated 6-8-2004. Since no mention has been made in the order passed by the Appellate Authority with regard to communication dated 6-8-2004, this Court is of the view that simply by way of filing return, the Department has had knowledge about the transaction of the respondent. To put it in short, the communication dated 6-8-2004 is very much essential for the purpose of deciding as to whether the show cause notice dated 6-10-2005 is barred by limitation as per actual period of limitation mentioned in Section 11A of the said Act or the appellant is entitled to get extended period of limitation. Therefore for the purpose of deciding the said aspect, the order passed by the Appellate Tribunal is liable to be set aside and the matter is liable to be remitted to the file of Appellate Tribunal. Decided in favour of Revenue.

Summary

Issues:
1. Interpretation of Section 11A of the Central Excise Act regarding limitation period for recovery.
2. Knowledge of the Department about the transactions of the respondent.
3. Applicability of extended limitation period in case of malpractice.
4. Validity of the order passed by the Appellate Tribunal.

Analysis:
1. The case involved a dispute regarding the recovery of wrongly utilized amount under Rule 12 of Cenvat Credit Rules, 2002. The Assistant Commissioner issued a show cause notice to the respondent, which was challenged before the authorities leading to an appeal before the Appellate Tribunal.

2. The Appellate Tribunal allowed the appeal on the grounds of limitation under Section 11A of the Central Excise Act, stating that the claim in the show cause notice was time-barred. The appellant contended that the malpractice by transferring Cenvat credit to a sister concern extended the limitation period to five years, which the Tribunal did not consider.

3. The respondent argued that since the Department had knowledge of the transactions and monthly returns were filed, the extended limitation period did not apply. The Tribunal concluded that the Department had knowledge based on the filed returns.

4. The Court found that the Appellate Tribunal did not mention a crucial communication from the Superintendent of Central Excise, which was essential to determine the limitation period. The Court set aside the Tribunal's order and remitted the matter back for reconsideration, directing the production of the said communication for a suitable finding on the limitation period.

In conclusion, the Civil Miscellaneous Appeal was allowed, the Tribunal's order was set aside, and the matter was remitted for further consideration with the directive to produce the crucial document for a proper determination of the limitation period.