2017 (9) TMI 613 - AT - Central Excise

CENVAT credit - fake invoices - issuance of invoices without issue of goods - issuance of second SCN by invoking extended period of limitation - Held that - in this case, investigation was conducted at the end of M/s. Mahabir Prasad & Co. and it was alleged that M/s. Mahabir Prasad & Co. were indulged in manipulating their accounts. On the basis of that investigation, a SCN was issued to the appellant for imposition of penalty on the basis of allegations made against M/s. Mahabir Prasad & Co. In the circumstances, subsequent SCN cannot be issued to the appellant by invoking the extended period of limitation to deny the cenvat credit - similar issue decided in the case of NATIONAL STEELS Versus COMMISSIONER OF C. EX., DELHI 2005 (10) TMI 194 - CESTAT, NEW DELHI - appeal allowed - decided in favor of appellant.

Summary

Issues:
1. Denial of cenvat credit on invoices issued by a supplier.
2. Validity of show cause notice invoking extended period of limitation.
3. Role of the appellant in the alleged manipulation by the supplier.

Analysis:
1. The appellant appealed against the denial of cenvat credit on invoices issued by M/s. Mahabir Prasad & Co. Investigation revealed manipulation by the supplier, leading to the issuance of a show cause notice to demand duty and penalty. The appellant was also issued a notice to deny cenvat credit. The appellant contested that no deliberate role was proven against them, citing precedents where lack of involvement led to credit allowance.

2. The appellant argued against the validity of the subsequent show cause notice based on the same investigation, invoking the extended period of limitation. The appellant contended that the earlier notice to the supplier should have sufficed, as no new evidence emerged against them. Reference was made to cases where delayed notices were deemed unsustainable due to lack of ongoing investigation or suppression of facts, supporting the appellant's position.

3. The tribunal found that the investigation into the supplier's malpractice was concluded in 1996 without any notice issued to the appellant. Relying on the National Steel case, the tribunal held that the show cause notice to the appellant was time-barred and unsustainable. The decision emphasized the importance of timely action by authorities and upheld the appellant's argument regarding the limitation period for issuing notices.

In conclusion, the tribunal allowed the appeal, ruling in favor of the appellant due to the show cause notice being barred by limitation. The judgment highlighted the necessity of timely and substantiated actions by authorities in such cases, ensuring fairness and adherence to legal principles.