2015 (4) TMI 240 - AT - Central Excise

Denial of CENVAT Credit - Suppression of facts - Invocation of extended period of limitation - Held that - There was a declaration filed by the assessee that the impugned capital goods would not be used exclusively in the production of final product, which was exempted from payment of whole excise duty leviable thereon. This was a statutory declaration filed by the assessee under the then Rule 57T of the erstwhile Central Excise Rules 1944. But, the fact remains that the appellant used the machinery exclusively in the manufacture of the exempted product. Thus, it is a clear case of mis-declaration of facts. The assessee deliberately declared that the imported capital goods would not be used exclusively in the manufacture of exempted product and then they are eligible to avail CENVAT Credit. Thus, it is a clear case of mis-declaration to evade payment of duty. Hence, the extended period of limitation would be applicable. - Decided against assessee.

Summary

Issues:
- Availment of CENVAT Credit on capital goods under conditional exemption notification
- Disallowance of CENVAT Credit and imposition of penalty
- Applicability of decision in the case of Spenta International Ltd
- Role and penalty on the Chief Manager
- Limitation period for the demand
- Mis-declaration of facts by the assessee
- Waiver of penalty on the employee

Analysis:

1. The case involved the assessee engaged in the manufacture of Polycarbonate Bottles, facing issues related to the availment of CENVAT Credit on capital goods under a conditional exemption notification, where the benefit of exemption was subject to not availing any credit of duty paid on inputs.

2. The dispute arose when the Additional Commissioner proposed to deny the MODVAT Credit on capital goods wrongly availed and utilized by the assessee, leading to disallowance of the credit, imposition of penalties, and subsequent appeals before the Tribunal by both the assessee and the Revenue.

3. The Advocate for the assessee argued against the disallowance, citing the conditional nature of the exemption notification and the divergent views on the issue of limitation, supported by various decisions, while contesting the penalty on the Chief Manager.

4. On the other hand, the Revenue's Authorised Representative relied on the decision of the Larger Bench in the case of Spenta International Ltd, asserting that the issue was squarely covered by the decision, and the demand was not barred by limitation due to willful mis-statement of facts by the assessee.

5. The Tribunal, after considering the arguments and facts, found that the assessee had utilized the imported capital goods in the manufacture of exempted goods, making the decision of the Larger Bench applicable in this case, leading to the rejection of both appeals filed by the Assessee and the Revenue.

6. The Tribunal also addressed the penalty on the Chief Manager, following precedents where penalties on employees were waived in similar situations, ultimately upholding the decision of the Commissioner (Appeals) in setting aside the penalty on the Chief Manager.

7. The judgment highlighted the mis-declaration of facts by the assessee, leading to the conclusion that the extended period of limitation was applicable due to the deliberate actions of the assessee to evade payment of duty, reinforcing the rejection of the appeals.

8. The comprehensive analysis covered the legal nuances of CENVAT Credit availment, applicability of precedent judgments, penalty imposition, limitation periods, and mis-declaration issues, resulting in the dismissal of appeals and upholding the decisions of the lower authorities.