2017 (3) TMI 711 - AT - Central Excise

Scope of SCN - SSI exemption - reversal of credit of inputs lying in stock and inputs contained in the finished goods lying in the stock - Held that - in the SCN there was proposal to deny the credit to the tune of ₹ 5,23,757/- whereas the Revenue is seeking to deny the credit of ₹ 23,85,552/- which is beyond the scope of SCN. Therefore, the demand of ₹ 23,85,552/- is not sustainable. Further, the demand sought to be confirmed in the SCN on the basis of average calculation without going into the actual value of credit to be denied. Therefore, the said demand is also not sustainable. Extended period of limitation - Held that - availemnt of SSI exemption by the respondent and reversal of the credit was in the knowledge of the department on 31.3.2002. Therefore, the SCN dated 14.9.2006 is time barred. Appeal dismissed - decided against Revenue.

Summary

Issues:
- Scope of show cause notice
- Calculation of cenvat credit reversal
- Bar of limitation for show cause notice

Scope of show cause notice:
The case involved the respondent availing SSI exemption but later required to pay duty. The show cause notice proposed a credit denial of ?5,23,757, yet the adjudicating authority confirmed a demand of ?23,85,552, exceeding the notice's scope. The Commissioner (Appeals) set aside the order due to this discrepancy. The Revenue appealed, arguing for the full reversal based on average calculation. However, the Tribunal found the demand beyond the notice's scope unsustainable.

Calculation of cenvat credit reversal:
The Revenue sought a credit denial of ?23,85,552 based on average calculation, not considering the actual value of credit to be denied. The Tribunal deemed this demand unsustainable, emphasizing the importance of accurate calculations in such matters. The respondent's counsel argued against the average basis, highlighting discrepancies in the calculation and the failure to consider all relevant inputs properly.

Bar of limitation for show cause notice:
The respondent contended that the show cause notice was time-barred as they had informed the department about availing SSI exemption and credit reversal on the same day. The notice, issued later invoking an extended period, was challenged on grounds of limitation. The Tribunal agreed, stating that the department was aware of the exemption and credit reversal on the specified date, rendering the notice time-barred. Consequently, the Tribunal dismissed the Revenue's appeal and disposed of the cross objection accordingly.