2015 (11) TMI 37 - AT - Central Excise

Duty demand - extended period of limitation - whether or not the appellant is liable to pay 10% of value of electricity wheeled out of their factory during the relevant period - Held that - On perusal of the case details it is clear that the matter regarding the status of electricity whether the same is excisable, exempted is a matter of dispute and has been subject matter of various rulings by CESTAT, Hon ble High Courts and Hon ble Supreme Court. In the appellant s own case earlier proceedings were initiated on the same grounds and adjudications were done. In 2006 same issue was taken up in audit and there were correspondence discussing the eligibility of Cenvat credit. Hence, we find that the allegation of willful suppression with intention to evade is not sustainable in the present case and the show cause notice-cum-demand issued on 12/11/2009 is hit by time bar beyond the normal period. It is seen from the impugned order that from October 2008 to June 2009 (covered by first show cause notice dated 12/11/2009) and during July 2009 to December 2009 (covered by second show cause notice dated 18/03/2010) and for the period January 2010 to June 2010 (covered by third show cause notice dated 03/02/2011), the appellant have reversed Cenvat credit attributable to input services used in relation to manufacture of electricity cleared outside. - show cause notice dated 12/11/2009 is hit by time bar beyond the normal period - Decided in favour of assessee.

Summary

Issues involved:
1. Availment of Cenvat credit of service tax paid on various input services used in the generation of electricity.
2. Liability to pay 10% of the value of electricity wheeled out of the factory.
3. Time bar applicability to the show cause notice-cum-demand dated 12/11/2009 covering the period of April 2005 to June 2009.

Analysis:
1. The appellant, a manufacturer of dutiable goods, had a dispute regarding the availment of Cenvat credit on service tax paid for input services used in generating electricity. The Department demanded 10% of the value of electricity sold outside the factory, claiming it was not eligible for input service credit. The appellant argued that electricity is a non-excisable product as per judicial precedents and that any demand should be limited to the proportionate credit of service tax on input services used for electricity generation wheeled outside the factory. The appellant also cited the Finance Act, 2010, allowing the reversal of credit for exempted goods. The Tribunal found the demand unsustainable for the period prior to October 2008, as the appellant had already reversed Cenvat credit for input services used in relation to electricity cleared outside the factory.

2. The key issue was whether the appellant was liable to pay 10% of the value of electricity wheeled out of their factory. The Tribunal noted that the status of electricity as excisable or exempted had been a subject of dispute in previous proceedings and audits. The Tribunal found that the show cause notice issued in November 2009, covering the period from April 2005 to June 2009, was time-barred due to lack of willful suppression to evade tax. The appellant had already reversed Cenvat credit for the relevant periods, making the demand under the show cause notice beyond the normal period invalid. Consequently, the Tribunal allowed the appeal, providing relief to the appellant based on the findings regarding the time-barred demand.

This judgment highlights the importance of legal precedents, the interpretation of tax laws, and the applicability of time limits in tax disputes. The Tribunal's decision rested on the specific facts of the case, the interpretation of relevant provisions, and the appellant's compliance with tax regulations during the periods in question.