2014 (12) TMI 314 - AT - Central Excise

Extended period of limitation - cenvat credit - Clearances of the exempted goods - Non maintenance of separate accounts - benefit of duty exemption Notification No. 64/95-CE dated 16/03/1995 - Imposition of interest and penalty - Held that - In their monthly returns filed, the appellant had indicated that they were availing the benefit of Notification No. 64/95-CE in respect of petroleum products supplied to Indian Navy and they were also discharging duty liability @ 8% of the value of exempted goods. In other words, in the statutory returns filed by the appellant, the fact of payment of an amount @ 8% was clearly declared. In these circumstances, it cannot be alleged that there was suppression on the part of the appellant. Therefore, the show-cause notice could not have been issued invoking the extended period of time and consequently the demand would get time barred. Hence, the question of recovery of any interest thereon or imposing of any penalties would not arise - Decided in favour of assessee.

Issues:
1. Confirmation of duty demand for the period of clearance of exempted goods.
2. Imposition of penalties under Section 11AC of the Central Excise Act, 1944.
3. Time bar for issuing show-cause notice for demands related to the period March 2003 to June 2005.
4. Applicability of Rule 6(3) of the Cenvat Credit Rules for payment of duty on exempted goods.
5. Liability to pay differential Cenvat Credit and interest for the period 07/2005 to 09/2006.
6. Refund/reimbursement of the amount already paid by the appellant.

Analysis:

1. The appeal challenged the Order-in-Appeal confirming duty demand of Rs. 23,24,421 and Rs. 31,381 with interest and penalties for clearances of exempted goods during the period 07/2005 to 09/2006. The appellant, M/s. Indian Oil Corporation Ltd., cleared goods without maintaining separate accounts for exempted goods, leading to a demand for differential Cenvat Credit and penalties. The appellant contended that the show-cause notice issued in February 2007 for clearances from March 2003 to June 2005 was time-barred, as they had declared availing benefits under Notification No. 64/95-CE in their monthly returns.

2. The Revenue argued that under Rule 6 (3) of the Cenvat Credit Rules, the appellant was required to pay the Cenvat Credit attributable to inputs used in manufacturing exempted final products. The appellant's failure to do so led to the demand for differential Cenvat Credit and interest. The extended period was invoked due to the appellant's violation of legal provisions, justifying the confirmation of duty demand, interest, and penalties.

3. The Tribunal noted that the appellant had declared payment of 8% duty liability for exempted goods in their statutory returns, indicating no suppression. As a result, the show-cause notice issued beyond the time limit was deemed time-barred, precluding the recovery of interest or penalties. However, during the relevant period, the appellant was obligated to reverse Cenvat Credit for exempted goods under Rule 6 (3) of the Cenvat Credit Rules. The appellant voluntarily paid the demanded duty, aligning with legal requirements.

4. The Tribunal referenced precedents to emphasize that the appellant's payment of the demanded duty, despite the time limit constraints, did not warrant a refund. Therefore, the demand for interest and penalties was set aside, confirming the amounts already paid by the appellant.

← Previous Next →