2015 (1) TMI 760 - HC - Central Excise

Wrong availment of CENVAT Credit - mis-statement or suppression of fact - notice issued after 22 months - Held that - proviso to Section 11A is not applicable because the show cause notice does not indicate that there was deliberate act of suppression of fact, fraud, mis-statement, etc. committed by the assessee. Mere act of omission by the assessee without there being any intention to evade payment of tax cannot be a ground to invoke the proviso to Section 11A of the Act, especially when the evasion came to the notice of the department when the audit was conducted in the month of March, 2010. - mere suppression of facts without there being a deliberate act of fraud, etc. with the intention to evade payment of duty cannot entitle the department to invoke the proviso to Section 11A of the Act. - Decided against Revenue.

Summary

Issues:
Delay in filing the appeal condonation, Allegations of wrongly taken Cenvat Credit, Time limitation for issuing show cause notice, Applicability of proviso to Section 11A, Deliberate act of suppression of fact, Interpretation of wilful mis-declaration or suppression, Precedents from Supreme Court, Dismissal of appeal at admission stage.

Delay Condonation:
The High Court heard arguments from both parties regarding the delay in filing the appeal and decided to condone the delay after considering the submissions.

Allegations of Wrongly Taken Cenvat Credit:
A show cause notice was issued under Section 11A of the Central Excise Act, 1944, alleging that the assessee wrongly utilized Cenvat Credit for specific periods. The notice was issued after a significant gap following an audit, raising questions about the timing of the allegations.

Time Limitation for Show Cause Notice:
The issue revolved around the time limitation for issuing a show cause notice under Section 11A of the Act, which allows a notice within one year from the relevant date. In this case, the notice was issued after 22 months, well beyond the statutory period.

Applicability of Proviso to Section 11A:
The appellant argued for the proviso to Section 11A, applicable when the limitation extends to five years. However, the Court held that the proviso does not apply in the absence of deliberate suppression of facts by the assessee.

Deliberate Act of Suppression of Fact:
The Court emphasized that a mere act of omission without the intention to evade tax does not warrant invoking the proviso to Section 11A. The department must establish deliberate fraud or suppression to apply the proviso.

Interpretation of Wilful Mis-declaration or Suppression:
Citing precedents, the Court clarified that wilful mis-declaration or suppression requires a positive act from the party to evade tax intentionally. Mere failure to declare does not constitute wilful suppression under the law.

Precedents from Supreme Court:
The judgment referenced Supreme Court decisions highlighting the necessity of deliberate and conscious withholding of information by the assessee to invoke the proviso to Section 11A. The Court distinguished the present case from previous rulings cited by the appellant.

Dismissal of Appeal:
Based on the analysis of the facts and legal principles, the Court found no merit in the appeal and dismissed it at the admission stage, upholding the decision against the appellant.