2014 (9) TMI 555 - HC - Central Excise

Cenvat Credit - reasonable steps before availing credit - original manufacturer of fabrics were alleged to be fictitious - endorsed invoices - period of limitation - the question that falls for determination is whether the department can escape its liability to find out a person who was registered with them and to pursue him for payment of duty - Following decision of PRAYAGRAJ DYEING & PRINTING MILLS PVT. LTD. Versus UNION OF INDIA 2013 (5) TMI 705 - GUJARAT HIGH COURT - Decided in favour of assessee.

Issues involved:
1. Justification of Tribunal's decision to remand the case to the original adjudicating authority.
2. Compliance with Rule 7(2) of Cenvat Credit Rules, 2002 regarding reasonable steps.
3. Differentiation between "supplier" and merchant/traders as per Rule 7(1)(e) of Cenvat Credit Rules, 2002.
4. Permissibility of proceedings against the appellant for denial of Cenvat credit and limitation under Section 11A(1) of the Central Excise Act, 1944.
5. Treatment of appellant in relation to goods received and registration under Central Excise Rules, 2002.
6. Application of legal principles from previous cases - M/s. Sheela Dyeing & Printing Mills Pvt. Ltd. and M/s. Aafloat Textiles (I) Pvt. Ltd.
7. Interpretation of Rule 7(2) of Cenvat Credit Rules, 2002 regarding reasonable steps.

Analysis:
1. The appellant challenged the Tribunal's decision to remand the case for fresh consideration. The questions raised included the justification of giving conclusive findings, compliance with Rule 7(2) of Cenvat Credit Rules, and differentiation between "supplier" and merchant/traders. The High Court referred to a previous judgment where similar issues were addressed, and the appeal was allowed in favor of the assessee. Following the same line of reasoning, the High Court allowed the present appeal, reversed the Tribunal's judgment, and disposed of the Tax Appeal accordingly.

2. The issue of compliance with Rule 7(2) of Cenvat Credit Rules was raised, questioning whether the appellant had taken reasonable steps as required. The appellant's counsel highlighted a previous judgment where similar issues were addressed, and the appeal was allowed in favor of the assessee. The High Court, without providing separate elaborate reasons, allowed the present appeal along the same line of reasoning as the previous judgment, reversed the Tribunal's decision, and disposed of the Tax Appeal accordingly.

3. The differentiation between "supplier" and merchant/traders as per Rule 7(1)(e) of Cenvat Credit Rules was questioned. The High Court referred to a previous judgment where similar issues were addressed, and the appeal was allowed in favor of the assessee. Without detailed reasons, the High Court allowed the present appeal in line with the previous judgment, reversed the Tribunal's decision, and disposed of the Tax Appeal accordingly.

4. The issue of permissibility of proceedings against the appellant for denial of Cenvat credit and limitation under Section 11A(1) of the Central Excise Act was raised. The High Court referred to a previous judgment where similar issues were addressed, and the appeal was allowed in favor of the assessee. Following the same line of reasoning, the High Court allowed the present appeal, reversed the Tribunal's decision, and disposed of the Tax Appeal accordingly.

5. The treatment of the appellant in relation to goods received and registration under Central Excise Rules was questioned. The High Court referred to a previous judgment where similar issues were addressed, and the appeal was allowed in favor of the assessee. Following the same line of reasoning, the High Court allowed the present appeal, reversed the Tribunal's decision, and disposed of the Tax Appeal accordingly.

6. The application of legal principles from previous cases, specifically M/s. Sheela Dyeing & Printing Mills Pvt. Ltd. and M/s. Aafloat Textiles (I) Pvt. Ltd., was discussed. The High Court referred to a previous judgment where similar issues were addressed, and the appeal was allowed in favor of the assessee. Following the same line of reasoning, the High Court allowed the present appeal, reversed the Tribunal's decision, and disposed of the Tax Appeal accordingly.

7. The interpretation of Rule 7(2) of Cenvat Credit Rules regarding reasonable steps was examined. The High Court referred to a previous judgment where similar issues were addressed, and the appeal was allowed in favor of the assessee. Without detailed reasons, the High Court allowed the present appeal in line with the previous judgment, reversed the Tribunal's decision, and disposed of the Tax Appeal accordingly.

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