2017 (3) TMI 1354 - AT - Central Excise

CENVAT credit - scope of SCN - in the SCN even though the eligibility of Cenvat credit was proposed to be denied solely on the ground of delay in availing credit, but in the impugned order, the Ld Commissioner exceeded the brief by examining the eligibility of Cenvat Credit in light of the N/N. 102/2007-CUS dt 14.9.2007 - Held that - In the SCN the only ground on which the Cenvat Credit was proposed to be denied and recovery proceeding initiated was that non availment of Cenvat Credit immediately after receipt of goods in their factory - raising the issue which is neither alleged in the SCN nor raised in any other manner would result into exceeding the brief which is not permitted - the impugned order is set aside to the extent of denial of credit beyond one year period - appeal allowed - decided partly in favor of appellant.

Summary

Issues:
1. Alleged wrongful availing of Cenvat Credit
2. Delay in availing Cenvat Credit on 4% SAD
3. Disallowance of Cenvat Credit based on non-compliance with Notification No. 102/2007-CUS

Analysis:
1. The appeal was against the order passed by the Commissioner alleging that the appellant wrongly availed Cenvat Credit. The appellant, engaged in manufacturing chemicals, was accused of availing credit of ?61,93,971 between December 2008 to Feb. 2009. The demand was confirmed for denial of total Cenvat Credit of ?45,17,498 along with a penalty. The appellant contended that the delay in availing credit on 4% SAD was due to an error in their SAP system. The Tribunal found the explanation plausible and convincing, attributing the delay to the faulty software. The Commissioner's order was set aside to the extent of denial of credit beyond one year period.

2. The appellant argued that they had availed Cenvat Credit on other eligible duties immediately after receiving goods against Bills of Entry, but the credit on 4% SAD was delayed due to the faulty SAP system. The Tribunal agreed that there was no delay in availing credit and even if there was, it was reasonable considering the software malfunction. The Commissioner was found to have exceeded the brief by examining the eligibility of Cenvat Credit based on Notification No. 102/2007-CUS, which was not mentioned in the show cause notice. Citing the judgment of the Gujarat High Court, the Tribunal set aside the order to the extent of denial of credit beyond one year.

3. The Revenue argued that the appellant should avail credit for all duties paid against Bills of Entry as soon as materials are received in their factory. They contended that Cenvat Credit on 4% SAD is admissible only if taken within a reasonable period, typically one year. However, the Tribunal found the appellant's explanation regarding the delay in availing credit on 4% SAD due to the faulty SAP system acceptable. The order disallowing credit beyond one year was set aside, and the appeal was allowed to that extent.