2017 (1) TMI 606 - AT - Central Excise

Valuation - reversal of credit u/r 6(3) (b) of the CENVAT Credit Rules 2002 - extended period of limitation - suppression of facts - Held that - Mere omission to give correct information is not suppression of facts unless it was deliberate to stop the payment of duty. An incorrect statement or wrong method of computation cannot be equated with willful misstatement - The appellant has submitted details of work order as well as filed the ER-1 returns to the department. It is for the department to conduct scrutiny and call for information from appellant, if not found in order - the department has not been able to establish suppression of facts or willful misstatement with intend to evade payment of duty on the part of the appellant - Invoking extended period is not acceptable in the situation presented by the instant case - demand time barred - appeal allowed - decided in favor of appellant.

Summary

Issues:
1. Calculation of excise duty on exempted goods.
2. Maintenance of separate accounts for dutiable and exempted goods.
3. Grounds of limitation for Show Cause Notice.

Analysis:
1. Calculation of excise duty on exempted goods:
The appellant, engaged in manufacturing various types of pipes, availed exemption under Notification No. 6/2002-CE for certain pipes cleared at nil rate of duty and at 16% ad valorem for others. The issue arose when the department contended that the appellant should not have deducted excise duty paid on inputs while calculating the amount payable under Rule 6(3)(b) of CENVAT Credit Rules 2002. A Show Cause Notice was issued for the period from March 2003 to March 2006, demanding recovery of a differential amount along with interest and penalty. The appellant argued that they followed the prescribed method of computation in good faith and there was no willful intention to evade duty.

2. Maintenance of separate accounts for dutiable and exempted goods:
The appellant did not maintain separate accounts for dutiable and exempted goods, as required under Rule 6(3)(b) of the CENVAT Credit Rules 2002. The department alleged that the appellant suppressed facts by deducting excise duty paid on inputs while arriving at the value of clearances for exempted goods. The appellant, on the other hand, contended that they consistently informed the department about their method of computation through various communications, work order details, and stamped invoices.

3. Grounds of limitation for Show Cause Notice:
The main contention raised by the appellant was that the Show Cause Notice issued in 2007 for the period from March 2003 to March 2006 was barred by limitation. The appellant argued that they had disclosed the relevant details in their ER-1 returns and communicated their method of computation to the department through various means. The appellant maintained that there was no suppression of facts on their part, and the extended period of limitation should not have been invoked. The Tribunal ultimately ruled in favor of the appellant, holding that the demand was time-barred due to the absence of suppression of facts or willful misstatement with the intention to evade payment of duty.

In conclusion, the Tribunal set aside the Impugned Order, allowing the appeal on the grounds of limitation. The judgment emphasized the importance of strict interpretation of the term "suppression" in tax matters and highlighted the necessity for clear communication between taxpayers and tax authorities to avoid disputes regarding duty payments.