2017 (7) TMI 87 - AT - Central Excise

Clandestine removal - DMT Melter Heat Exchanger - Sub Rule (5) of Rule 3 of CCR 2004 - Held that - it is not a case that the appellant had suppressed the fact regarding removal of capital goods with the intention to evade payment of Central Excise Duty. Since as a registered assessee the appellant has complied with the requirement of the Central Excise statute on removal of used capital goods from the factory the charges of suppression misstatement etc. cannot be alleged justifying invocation of the extended period of limitation for issuance of SCN - demand barred by time limitation - appeal allowed - decided in favor of appellant.

Summary

Issues:
- Applicability of straight line method for cenvat credit calculation
- Barred by limitation of time

Analysis:

1. Applicability of straight line method for cenvat credit calculation:
The appellant argued that the straight line method for calculating cenvat credit, as per sub-rule (5) of Rule 3, should have retrospective effect from the date of substitution. The appellant contended that since the capital goods were removed after more than 10 years from the date of procurement, the deduction of credit should be inconformity with the new method. The Department, on the other hand, asserted that the Notification introducing the straight line method was not retrospective and would not apply to periods before its enactment. The Tribunal examined the facts and concluded that the appellant had procured the disputed capital goods in 1996 and removed them in 2007, with all relevant information duly reflected in the invoice. As the appellant had not suppressed any facts to evade duty payment, the Tribunal held that the invocation of the extended period of limitation for issuing a show cause notice was not justified.

2. Barred by limitation of time:
The appellant further argued that the show cause notice issued in 2009 was time-barred as the Department was aware of the removal of old and used capital goods in 2007. The Department contended that the notice was issued within the normal period of limitation from the date of their knowledge. After considering both arguments, the Tribunal found that since all necessary information regarding the initial cenvat credit and removal of capital goods was known to the Department in 2007, the show cause notice issued in 2009 was indeed barred by limitation of time. Consequently, the Tribunal set aside the impugned order and allowed the appeal in favor of the appellant solely on the ground of limitation, without delving into the merits of the case.

In conclusion, the Tribunal ruled in favor of the appellant, holding that the proceedings initiated by the Department for confirming the cenvat demand and imposing a penalty were time-barred. The judgment emphasized the importance of adherence to statutory limitations in initiating legal actions, thereby providing relief to the appellant on the basis of procedural grounds.