2016 (5) TMI 657 - AT - Central Excise

Invocation of extended period of limitation - Demand of interest raised after one year - time barred - Entire amount of Cenvat credit wrongly taken was suo moto paid as soon as mistake was pointed out themselves - Department argued that the period of 1(one) year, referred to in Sub-Section (1) of Section 11A, is to be counted from the date of intimation given by the Appellant regarding payment of amount by relying on the provisions of section 11A(2B) of Central Excise Act, 1944. Held that - as per proviso to Section 11A(2B), period of 1(one) year referred to in Sub-section (1) of Section 11A shall be counted from the date of receipt of the information/intimation from an assessee. Therefore, the demand of interest has to be considered as demand of duty to which Section 11A ibid is applicable. Having said that relevant date for calculating period of 1(one) year for demanding interest will have to be calculated w.e.f. 26.06.2009 when Appellant intimated the Department about the payment of duty. The Show Cause Notice was issued on 23.06.2010 which is within a period 1(one) year from the date of intimation (26.06.2009) given by the Appellant. Accordingly it is held that demand issued to the Appellant is not time barred and has been correctly confirmed by the First Appellate Authority. Imposition of penalty - Appellant contended that maximum penalty under relevant Cenvat Credit Rules would not exceed ₹ 2,000/- as per amendment carried out on 11.05.2007 - Held that - penalty of ₹ 10,000/- imposed by the First Appellate Authority is reduced to ₹ 2,000/-. - Decided partly in favour of appellant

Summary

Issues:
1. Calculation of interest demand period under Section 11A of the Central Excise Act, 1944.
2. Imposition of penalty under Rule 15(3) of the CENVAT Credit Rules, 2004.

Analysis:

Issue 1: Calculation of interest demand period under Section 11A of the Central Excise Act, 1944:
The Appellant mistakenly took Cenvat Credit for export-related services instead of claiming a refund. Upon realization, the Appellant paid the entire amount and informed the Department. The Appellant argued that the Show Cause Notice issued after a year was time-barred for demanding interest. The Appellant relied on the case law of Commissioner of C.Ex., Surat-I vs. Neminath Fabrics Pvt.Ltd. to support their stance. However, the Revenue contended that the period for demanding interest should be calculated from the date of intimation of payment. The Tribunal analyzed Section 11A(2B) of the Act, which specifies that the one-year period is counted from the date of receipt of information of payment. The Tribunal held that the demand for interest was not time-barred as the Show Cause Notice was issued within one year of the intimation given by the Appellant. The Tribunal differentiated this case from the cited case laws, emphasizing the importance of written intimation as the relevant date for calculating the period under Section 11A.

Issue 2: Imposition of penalty under Rule 15(3) of the CENVAT Credit Rules, 2004:
The Appellant contested the penalty imposed by the First Appellate Authority, arguing that the maximum penalty under Rule 15(3) was amended to Rs. 2,000, not Rs. 10,000. The Tribunal agreed with the Appellant, noting that the penalty should not exceed Rs. 2,000 as per the amendment. The Tribunal allowed the appeal to this extent and reduced the penalty from Rs. 10,000 to Rs. 2,000.

In conclusion, the Tribunal allowed the appeal on the penalty issue, reducing it to the correct amount as per the rules. However, the Tribunal dismissed the appeal regarding the interest demand period, ruling that the demand was not time-barred based on the provisions of Section 11A(2B) of the Central Excise Act, 1944.