2016 (2) TMI 589 - AT - Central Excise

Cenvat credit denied - capital goods removed to the sister concern - extended period of limitation - Held that - It is undisputed that appellant had availed Cenvat credit of ₹ 83,494/- which is an amount debited by their sister unit while transferring the moulds to them. It is also a fact that during the relevant period in question, i.e., October, 2000 provisions of Rule 57AC(2) of Central Excise Rules, 1944 did not contemplate for availing of 100% of Cenvat credit on the capital goods if they were to be removed in the same financial year. As find that the reliance placed by the ld. counsel on Hindustan Lever Ltd. (2004 (3) TMI 221 - CESTAT, MUMBAI ) of the Tribunal is misplaced, as the said view of the Tribunal has been upturned by the Hon ble High Court recording clearly that the provisions of Central Excise Act, 1944 post 1-3-2002 cannot be applied for the interim period when there were no provisions for availment of 100% Cenvat credit on capital goods if they were to be removed as such to their sister concern or any other place. On merits, find that the appeal fails. As regards the extended period invoked on an allegation that there was suppression, misstatement with intent to evade payment of duty, find that these allegations are not correct inasmuch, find that in the appellant s own case, the Additional Commissioner of Central Excise, Kanpur Commissionerate, in an identical issue of transfer of moulds to their units has held that appellant could avail 50% of the amount of the duty payable on moulds, when purchased. Nothing was brought to the notice that revenue had filed an appeal against such an order. The appellant herein during the period October, 2000 (relevant period in this case) could have entertained a bona fide belief that they are eligible for Cenvat credit of 50% of the amount of duty payable on the capital goods when they were cleared by the manufacturer. In my considered view, the show cause notice which invokes the extended period for the demand of ineligible Cenvat credit is blatantly hit by limitation and the findings reached by both lower authorities as to the demand being correct even on limitation, is liable to be set aside on the ground of limitation. - Decided in favour of assessee

Summary

Issues:
Availment of Cenvat credit on moulds received from sister unit, interpretation of Central Excise Rules, 1944, applicability of previous and subsequent laws, limitation period for demand of Cenvat credit, suppression and misstatement allegations, applicability of extended period for demand.

Analysis:

1. Availment of Cenvat credit:
The appellant availed Cenvat credit of an amount debited by their sister unit for moulds received. The revenue contended that the appellant could only avail 50% of the duty payable in the financial year of receipt. Both lower authorities ruled against the appellant.

2. Interpretation of Central Excise Rules:
The appellant argued that during the relevant period in October 2000, the Central Excise Rules did not allow for 100% Cenvat credit on capital goods if removed in the same financial year. The appellant relied on a previous judgment and claimed a legitimate right to avail the full credit.

3. Applicability of previous and subsequent laws:
The appellant highlighted the changes in Cenvat credit provisions over time and argued that the law in force during the relevant period should be applied. The appellant cited a Supreme Court ruling and a previous order in their favor to support their case.

4. Limitation period for demand of Cenvat credit:
The appellant raised the issue of limitation, stating that the show cause notice was issued in 2006 for a credit availed in 2000. The appellant argued that they had a bona fide belief in their eligibility for the credit, and the demand should be considered time-barred.

5. Suppression and misstatement allegations:
The departmental representative alleged suppression and misstatement with intent to evade duty payment. However, the appellant pointed out a previous order in their favor on a similar issue, indicating a bona fide belief in their actions.

6. Applicability of extended period for demand:
The Tribunal found that the show cause notice invoking the extended period for demanding ineligible Cenvat credit was hit by limitation. The Tribunal set aside the impugned order on the ground of limitation and allowed the appeal.

In conclusion, the Tribunal ruled in favor of the appellant, setting aside the demand for Cenvat credit on grounds of limitation and highlighting the appellant's bona fide belief in their actions. The judgment emphasized the importance of applying the relevant laws in force during the period in question and upheld the appellant's right to avail the credit as per the prevailing rules at that time.