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2015 (10) TMI 2275 - AT - Central ExciseAvailment of wrongful CENVAT Credit - Imposition of equivalent penalty - Held that - Department has come to know about wrongful availment of credit on 2.1.2008. On pointing out the defect, the appellant reversed the credit. If the appellant was liable to pay interest the department ought to have informed the same to the appellant soon after receiving the letter informing the reversal of credit. - Department has no case that the invoices are bogus. No investigation at the end of supplier of machine was done. There may be many reasons for absence of the machines in the factory. If there was fraud it is for the department to establish the same. In a catena of judgements, the Supreme Court has clarified that when the fact is within the knowledge of the department, the extended period of limitation is not invokable. Again it is pointed out by the learned Counsel for the appellant, that the credit when reversed before utilization of the same would amount to not taking credit. Taking into consideration these facts and circumstances of the case, I do not find that department has been able to establish fraud, or suppression with intention to evade payment of duty so as to invoke extended period. I am of the view that the demand is barred by limitation. - Decided in favour of assessee.
Issues:
1. Limitation period for issuing show cause notice. 2. Wrongful availment of Cenvat Credit on machines not received in the factory. 3. Suppression of facts and intention to evade payment of duty. 4. Reversal of credit without interest payment. Analysis: Issue 1: Limitation period for issuing show cause notice The appellant argued that the show cause notice issued after four years was barred by limitation as the fact of wrongful credit availment was known to the department in 2008 itself. The appellant reversed the credit promptly and informed the department about it. The appellant contended that the summons issued to the production manager after a long delay was an attempt to escape the limitation period. The appellant relied on legal precedents to support their argument that the extended period of limitation was not applicable in this case. Issue 2: Wrongful availment of Cenvat Credit The department alleged that the appellant wrongly availed credit on machines that were not physically present in the factory premises. The appellant had reversed the credit on their own, but the department claimed that interest was not paid on the reversed amount. The department argued that there was fraud and suppression of facts on the part of the appellant, as the credit was availed based on invoices without actual receipt of the goods. The department invoked the extended period of limitation due to alleged suppression by the appellant. Issue 3: Suppression of facts and intention to evade payment of duty The department contended that the appellant suppressed facts regarding the wrongful credit availment, which came to light only through a search conducted by the officers. The production manager's statement was cited as evidence of the appellant's intention to evade duty payment. The department claimed that the contradictory statements by the appellant indicated suppression and fraudulent intent, justifying the invocation of the extended limitation period. Issue 4: Reversal of credit without interest payment The appellant reversed the credit before utilization and informed the department about it. The department argued that the appellant did not pay interest on the reversed amount. However, the appellant maintained that the reversal of credit before utilization amounted to not taking credit. The appellant's argument was supported by the fact that the department did not notify them about any interest payment requirement promptly after the credit reversal. The tribunal found in favor of the appellant, setting aside the impugned order and allowing the appeal. The tribunal held that the demand was barred by limitation as the department failed to establish fraud or suppression with the intention to evade duty payment. The tribunal emphasized that the department should have acted promptly upon discovering the wrongful credit availment, and the extended limitation period was not applicable in this case.
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