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2015 (10) TMI 125 - AT - Central ExciseDemand of CENVAT credit - Invocation of extended period of limitation - Held that - it is noticed that Commissioner (Appeals) has clearly observed that the assessee is not part to the fraud committed by the grey fabric suppliers. In this case also the grey fabric suppliers issued invoices. So, the present case is squarely covered by the decision or the Hon ble High Court in the case of Prayagraj Dyeing & Printing Mills Pvt. Limited (2013 (5) TMI 705 - GUJARAT HIGH COURT). So, the demand of inadmissible CENVAT credit is clearly barred by limitation and is not sustainable and the penalty is also not imposable. - impugned order is set-aside - Decided against Revenue.
Issues:
1. Denial of CENVAT credit based on invoices from untraceable suppliers. 2. Imposition of penalties under Cenvat Credit Rules, 2002. 3. Applicability of the extended period of limitation for demanding CENVAT credit. Analysis: Issue 1: Denial of CENVAT credit based on invoices from untraceable suppliers The case involved the denial of CENVAT credit amounting to Rs. 23,19,610/- along with interest, availed by the appellant from February 2003 to March 2003 and September 2003, based on invoices issued by suppliers of grey fabrics who were found to be untraceable or non-existent. The adjudicating authority confirmed the demand, but the Commissioner (Appeals) reduced the penalty. The Tribunal noted that the appellant availed credit as per Rule 7 of Cenvat Credit Rules and that there was no evidence to conclude their involvement in fraud. Citing a similar case, the Tribunal found that the demand for credit was barred by limitation, as established in the case of Prayagraj Dyeing & Printing Mills Pvt. Limited. The Tribunal ruled in favor of the appellant, setting aside the impugned order and allowing the appeal. Issue 2: Imposition of penalties under Cenvat Credit Rules, 2002 The adjudicating authority had imposed penalties under Rule 13(2) of Cenvat Credit Rules, 2002, read with Section 11AC of the Central Excise Act, 1944. The Commissioner (Appeals) modified the penalty, reducing it to Rs. 5,79,903/- under Rule 13(1) of the Cenvat Credit Rules, 2002. However, the Tribunal, considering the lack of evidence implicating the appellant in fraud, concluded that the penalty was not sustainable. The Tribunal's decision was influenced by the precedent set in the case of Prayagraj Dyeing & Printing Mills Pvt. Limited, where the High Court ruled against imposing penalties in similar circumstances. Issue 3: Applicability of the extended period of limitation for demanding CENVAT credit The main contention revolved around the extended period of limitation for demanding CENVAT credit. The Tribunal referred to the decision of the Hon'ble Gujarat High Court in the case of Prayagraj Dyeing & Printing Mills Pvt. Limited, which determined that the demand for credit was barred by limitation. The Tribunal found that the present case, where the appellant was not involved in the fraud committed by the suppliers, aligned with the ruling in the aforementioned case. Consequently, the demand for inadmissible CENVAT credit was deemed barred by limitation, leading to the rejection of the Revenue's appeal and the allowance of the appellant's appeal with consequential benefits. In conclusion, the Tribunal's judgment in this case highlighted the importance of evidence, precedent, and legal provisions in determining the denial of CENVAT credit, imposition of penalties, and the applicability of the extended period of limitation.
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