2017 (2) TMI 890 - AT - Central Excise

CENVAT credit - compounded levy scheme - From March, 2002 the appellant have started payment of duty and they were opted out from the compounded levy scheme - whether the credit on capital goods should be considered on the date of its receipt or any date subsequently? - Held that - the appellant at the time of receipt of the capital goods was not legally entitle for Cenvat credit therefore at later stage also they are not eligible for Cenvat credit on the capital goods. As regard the issue raised by the appellant on limitation, appellant have availed cenvat credit in the month of March, 2002 and department was not aware that whether the said capital goods received in March, 2002 or prior to that, therefore credit details shown in the monthly return does not help the appellant that there is no suppression of facts particularly as regard to receipt and installation of the capital goods, therefore the extended period of demand correctly invoked. Appeal dismissed - decided against appellant.

Summary

Issues:
Cenvat credit eligibility on capital goods received under compounded levy scheme; Time limit for issuance of show cause notice invoking extended period.

Analysis:
The appellant availed Cenvat credit on capital goods received while operating under a compounded levy scheme, leading to a show cause notice proposing denial of credit. The adjudicating authority confirmed the demand, imposing both a penalty and interest. The appellant contended that credit was taken when there were no restrictions and that the show cause notice issued in 2005, invoking the extended period, was time-barred. The appellant cited a relevant case in support of their argument.

The Revenue, represented by the Assistant Commissioner, reiterated the findings of the impugned order. The Tribunal considered the submissions, acknowledging that the appellant received the capital goods during the period they were not entitled to credit under the compounded levy scheme. The key issue was whether credit eligibility should be determined at the time of receipt or subsequently. The Tribunal referred to a previous decision holding that credit eligibility is tied to the dutiability of the final product on the date of capital goods receipt. The Tribunal cited various judgments to support this position.

The Tribunal emphasized that credit eligibility is determined based on the dutiability of the final product at the time of capital goods receipt. The appellant's argument on limitation was rejected as the department was unaware of the capital goods' receipt date, justifying the invocation of the extended period for demand. Consequently, the impugned order was upheld, and the appeal was dismissed. The judgment was pronounced in court on 20/01/2017.