2016 (10) TMI 107 - AT - Central Excise

Invokation of extended period of limitation - Demand and recovery of Cenvat credit - removal of credit availed shrink packing machine which was received by them from their another unit to their own third unit without reversal of Cenvat credit. intention to evade payment of duty - Held that - I find that within the parameters of the law laid down by Hon ble High Court at Allahabad as ruled in the above stated case of Commissioner of Central Excise and Service Tax Vs. Triveni Engineering & Industries Ltd., Tirunelveli if the show cause notice is to be issued for extended period the intention to evade payment of duty has to be established. The impugned show cause notice has not established the intention to evade duty since the contentions of the appellant covered by pronouncement in the case of Madura Coats Pvt. Ltd. was brought to the notice of the department before the issue of show cause notice. Therefore, I hold that the show cause notice is hit by limitation. - Decided in favour of appellant

Summary

Issues:
1. Reversal of Cenvat credit on removal of used capital goods.
2. Invocation of extended period under Section 11A of Central Excise Act, 1944.
3. Interpretation of the phrase "As such" in the Rules.
4. Application of the proviso to Section 11A regarding suppression of facts.

Analysis:
1. The case involved a dispute regarding the reversal of Cenvat credit on the removal of a shrink packing machine from one unit to another without reversing the credit. The appellant argued that based on precedents like the Madura Coats Pvt. Ltd. case, they were not required to reverse the credit on used capital goods. The original authority confirmed the demand, but the Tribunal held that the appellant's contentions were valid, citing the Madura Coats case and allowing the appeal.

2. The Revenue issued a show cause notice invoking the extended period under Section 11A, alleging suppression of facts to evade duty payment. The appellant contended that the notice was beyond the limitation period and lacked evidence of intent to evade duty. The Tribunal agreed, referencing a High Court ruling that for an extended period, the intent to evade duty must be established. As the notice did not prove such intent and the appellant had informed the Revenue about relevant precedents, the Tribunal held the notice was time-barred.

3. The appellant raised the issue of interpreting the phrase "As such" in the Rules concerning Cenvat credit reversal. They argued that various pronouncements had debated this phrase over the years. The Tribunal did not delve deeply into this issue but focused on the applicability of precedents and the Revenue's failure to establish intent to evade duty.

4. Regarding the proviso to Section 11A, the Tribunal emphasized the need to prove deliberate suppression of facts or intent to evade payment for invoking the extended period. Relying on a High Court ruling, the Tribunal found that the show cause notice lacked evidence of intent to evade duty, especially as the appellant had informed the Revenue about relevant case law before the notice was issued. Consequently, the Tribunal ruled in favor of the appellant, setting aside the original orders and allowing any consequential relief.