2016 (11) TMI 265 - AT - Central Excise

Cenvat credit - capital goods - availing 100% credit on moulds and dies - Penalty - Held that - under the facts and circumstances there is no mala fide and /or contumacious conduct on the part of the appellant in availing 100% Cenvat credit on moulds and dies during the period October, 2003 to May, 2004 - the appellant have calculated the interest element and paid the same on the excess credit so taken in for the first year under intimation to the Revenue, before the issue of show cause notice - Appeal allowed.

Summary

Issues:
1. Whether the extended period of limitation was rightly invoked in the show cause notice.

Analysis:
The appellant, a manufacturer of plastic parts, appealed against the Order-in-Appeal passed by the Commissioner (Appeals) Customs and Central Excise. The main issue was whether the extended period of limitation was correctly invoked in the show cause notice. The appellant had availed 100% Cenvat credit on moulds and dies based on a Circular dated 22/9/2003, which was later modified by another Circular on 13/10/2003 to allow 50% credit in the first year and the balance in the subsequent year. The Revenue objected to the appellant's 100% credit claim during a revenue audit and issued a show cause notice proposing a demand. The Commissioner Appeals modified the demand, sustaining the levy for taking 50% balance credit in the first year and confirmed the duty demand for the excess amount taken along with interest. The penalty was reduced. The appellant contended that there was no fraud or suppression as the credit was taken based on the initial Circular, and they had paid the interest on the excess credit before the show cause notice was issued. The Tribunal held that there was no mala fide conduct on the part of the appellant and set aside the Order-in-Appeal and Order-in-Original, stating that the extended period of limitation was not applicable in this case.

In conclusion, the Tribunal allowed the appeal, stating that the appellant was entitled to consequential benefits in accordance with the law. The judgment emphasized that there was no fraudulent intent or suppression by the appellant in availing the Cenvat credit, as it was based on the Circular in force at that time. The Tribunal ruled that the extended period of limitation was not applicable in this scenario, as the appellant had paid the interest on the excess credit before the show cause notice was issued, demonstrating good faith and compliance with the law.