2015 (1) TMI 215 - AT - Central Excise

CENVAT Credit - Evasion of duty - Suppression of facts - Invocation of extended period of limitation - Held that - For the period from 1995-2000, a show cause notice had been issued to the appellant to demand duty on various scrap items sold by them and at that time the used dryer screen felt even though the same was being sold was completely omitted. Thereafter from 2000 onwards according to the records produced before us, the appellant was intimating the department as and when they cleared the metal scrap, used dryer screen felt, etc. They were also submitting a copy of the invoice and the amount realized. Same way in March, 2002 Superintendent in-charge of the appellant advised them not to submit invoices relating to the sale of used dryer screen felts. The above facts emerging from the records would show that even the departmental officers felt that there was no duty liability on the used dryer screen felts cleared by the appellant and therefore the steps as mentioned above were taken. That being the position, we find it extremely difficult to agree with the observations made by the lower authorities that appellants have deliberately and intentionally evaded payment of duty, suppressed facts and sold them without intimating to the department. Therefore in our opinion extended period could not have been invoked in this case. As regards the duty demand within the normal period, only one sale covered by the invoice dated 16-7-2004 involving value of the felt of ₹ 43,430/- would be liable to excise duty. In the decision of the Tribunal in the case of CCE, Hyderabad-III v. Navodhaya Plastic Industries Ltd. 2013 (12) TMI 82 - CESTAT CHENNAI , the Tribunal had taken a view in para 10 which we reproduce for better appreciation. Appellant would be liable to pay duty in terms of para 8 of the decision of the Larger Bench of this Tribunal in the case of Navodhaya Plastic Industries Ltd. (supra) - there will be no penalty, the interest applicable from the date of liability till the date of payment is also payable - Decided partly in favour of assesse.

Summary

Issues: Duty liability on clearance of used drier screen felts, invocation of extended period for demand, duty demand within the normal period, applicability of penalty and interest.

Duty liability on clearance of used drier screen felts:
The Appellate Tribunal considered the case of a paper mill that sold used drier screen felts between 2000 and 2004. The issue revolved around whether the appellant should have paid duty treating the clearances as clearance of felts as such, leading to a demand for duty of Rs. 1,95,351. The Tribunal noted that a show cause notice from 1995-2000 did not include the used dryer screen felts, indicating a lack of clarity on duty liability. The appellant had informed the department about clearances, and even the departmental officers did not initially perceive a duty liability. Consequently, the Tribunal concluded that the extended period for demand could not be invoked due to the absence of intentional evasion or suppression of facts.

Invocation of extended period for demand:
The Tribunal rejected the invocation of the extended period for demand, emphasizing the lack of deliberate evasion or suppression of facts by the appellant. The records indicated that the appellant had informed the department about clearances, and even departmental officers did not consider duty liability on the used dryer screen felts. This led the Tribunal to conclude that the extended period for demand was not warranted in this case.

Duty demand within the normal period:
Regarding duty demand within the normal period, the Tribunal determined that only one sale involving a value of Rs. 43,430 would be liable to excise duty. Citing a previous Tribunal decision, the Tribunal highlighted the importance of consistent application of Cenvat credit rules to prevent abuse of the scheme. The appellant was found liable to pay duty based on the decision of the Larger Bench of the Tribunal, which outlined the methodology for calculating the credit amount to be reversed.

Applicability of penalty and interest:
In the given circumstances, the Tribunal decided that no penalty would be imposed. However, the appellant was liable to pay interest from the date of liability until the date of payment. The appeal was disposed of with this decision, emphasizing the payment of interest but no penalty in the case.

This comprehensive analysis of the judgment highlights the key issues of duty liability, extended period for demand, duty demand within the normal period, and the applicability of penalty and interest in the context of the appellant's case before the Appellate Tribunal.