2016 (8) TMI 538 - AT - Central Excise

Demand - irregular Cenvat credit on Cement - Period of limitation - Held that - it can be safely inferred that department was well aware of the credit availed on cement at the time of issuance of the earlier show-cause notice itself. As already mentioned earlier, the period of the earlier show-cause notice and the show-cause notice pertaining to this appeal are overlapping. The dates of the invoices of cement also fall in these overlapping periods. When the demand of part of the items of the subject period is hit by limitation unless there is some cogent evidence to establish willful suppression, regarding the cement items, the entire demand would be time barred. The contention of the department that credit availed on cement came to light only in audit is not tenable. The Revenue has failed to establish why the credit availed on cement was not made part of the earlier show-cause notice, when these items were availed during such period also. Therefore, the entire demand is barred by limitation - Decided in favour of appellant with consequential relief

Issues:
1. Availment of CENVAT credit on inputs and capital goods, including steel items and cement.
2. Disallowance of credit by the Commissioner(Appeals) and imposition of penalty.
3. Applicability of limitation period for demanding irregularly availed credit.
4. Interpretation of law regarding admissibility of credit on steel items and cement.

Analysis:

1. The appellant, engaged in manufacturing sponge iron, availed CENVAT credit on various items like MS angles, channels, plates, TMT bars, and cement as capital goods. A show-cause notice was issued proposing recovery of irregularly availed credit, disallowing a demand of Rs. 7,99,468 along with interest and penalty. The Commissioner(Appeals) set aside the demand on steel items due to limitation but upheld the demand of Rs. 1,97,559 on cement. The appellant contended that the entire demand was time-barred, as there was no suppression of facts and the department was aware of the credit availed on the items. The appellant argued that they believed the credit was admissible, citing relevant judgments.

2. The learned consultant for the appellant argued that the demand was hit by limitation, as the department was aware of the credit availed on the items. The Commissioner(Appeals) had erred in upholding part of the demand without justification for invoking the extended period. The appellant had disclosed the credit availed in their returns, and previous proceedings had allowed credit on MS items. The appellant's consultant emphasized that there was no intention to evade duty payment and that the issue was related to the interpretation of law. The appellant relied on legal judgments to support their claim.

3. The learned Authorized Representative (AR) contended that the credit was not admissible, and the Commissioner had rightly set aside the credit on MS items due to limitation. The disallowance of credit on cement was argued to be sustainable based on a specific judgment. However, the appellant argued that the entire demand should be time-barred due to the overlapping periods of the show-cause notices and lack of willful suppression.

4. The Tribunal analyzed the invoices of the goods/items on which credit was availed, noting that most invoices were prior to a specific date. It was observed that the department was aware of the credit availed on steel items and cement, as evidenced by the overlapping periods of the show-cause notices. The Tribunal held that the entire demand was time-barred due to lack of evidence of willful suppression and the department's awareness of the credit availed. Consequently, the impugned order was set aside, and the appeal was allowed in favor of the appellant based on the limitation issue. No further analysis on the merits was conducted due to the limitation ruling.

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