2015 (6) TMI 403 - AT - Central Excise

Invocation of extended period of limitation - Revenue neutrality - whether the extended period of limitation under proviso to Section 11A of the Central Excise Act, 1944 is applicable and whether the demand within the period of limitation is demandable from the Appellant in view of the doctrine of revenue neutrality - Held that - CENVAT Credit by the DTA unit is not required to be reversed/paid when the inputs are cleared under CT-3 certificate by DTA unit to a 100% EOU. - demand has been held to be not sustainable on account of revenue neutrality by relying upon the judgment in the case of Commissioner, C.Ex. & Cus, Vadodara Vs Narmada Chematur Pharmaceuticals Ltd 2004 (12) TMI 93 - SUPREME COURT OF INDIA and Commissioner of C.Ex., Pune Vs Coca Cola India Pvt.Ltd 2007 (4) TMI 17 - SUPREME COURT OF INDIA . It is observed from the above case laws decided by the Hon ble Apex Court that it is not clear whether the extended period was invokable in these cases. It is further observed from the provisions of Rule 9(1)(b) of CENVAT Credit Rules, 2004 that CENVAT Credit is not admissible on a supplementary invoices where non-levy or short levy takes place on account of reason of fraud, collusion, or any willful mis-statement or suppression of facts. In case, the extended period is held to be invokable, then the recipient of the inputs will not be eligible for CENVAT Credit and in such a situation, it will not be the case of revenue neutrality. - Decided in favour of assessee.

Summary

Issues:
1. Applicability of extended period of limitation under proviso to Section 11A of the Central Excise Act, 1944.
2. Whether demand within the period of limitation is demandable from the Appellant in view of the doctrine of revenue neutrality.

Analysis:

Issue 1: Applicability of Extended Period of Limitation
The Appellant argued that the demand period from 2005-06 to December 2009 should not fall under the extended period of limitation due to the doctrine of revenue neutrality. They cited case laws like Lakshmi Synthetic Machinery Mnfrs. Ltd and Gharda Chemicals Ltd to support their claim that no CENVAT Credit was required to be disallowed under certain circumstances. The Appellant contended that the extended period cannot be invoked when the issue is decided by a Larger Bench, as per the judgment of the Hon'ble Gujarat High Court. The Tribunal agreed with the Appellant, citing precedents and settled law, and held that the demand beyond one year from the date of clearance is not sustainable and must be dismissed as time-barred.

Issue 2: Doctrine of Revenue Neutrality
The Appellant and the Revenue presented conflicting arguments regarding revenue neutrality. The Appellant asserted that due to revenue neutrality, no demand should be confirmed within the period of limitation, as the CENVAT Credit reversed by the Appellant would have been admissible to the 100% EOU under Rule 5 of CENVAT Credit Rules, 2004. They relied on various case laws to support their stance. On the other hand, the Revenue argued that revenue neutrality is not applicable in every situation, citing a case law from CESTAT Mumbai. The Tribunal, after considering the arguments and case laws, concluded that the demand within the period of limitation is not sustainable on revenue neutrality grounds. They referenced specific judgments from the Hon'ble Supreme Court to support their decision and ultimately allowed the appeal filed by the Appellant with consequential relief.

In conclusion, the judgment by the Appellate Tribunal CESTAT Ahmedabad addressed the issues of applicability of the extended period of limitation and the doctrine of revenue neutrality in a detailed manner, providing thorough analysis based on legal precedents and arguments presented by both parties.