2018 (2) TMI 784 - AT - Central Excise

Whether the show cause notice have been validly issued, invoking the extended period of limitation? Held that - there is no allegation in the SCN in the nature of concealment of facts or recording of wrong or misleading information in the records or books of accounts or any other contumacious conduct on the part of the appellant - it appeared that the assessee have taken the credit without any ulterior motive or with intention to evade payment of tax - Under these facts and circumstances, the extended period of limitation is not invokable and accordingly, the SCN is not tenable. Appeal allowed - decided in favor of appellant.

Summary

Issues:
Validity of show cause notice invoking extended period of limitation.

Analysis:
The appeal revolved around the validity of the show cause notice issued, invoking the extended period of limitation. The revenue suspected the evasion of Central excise duty due to undervaluation of final products by the appellant. Following an inspection on 21st December, 2011, it was alleged that the appellant had availed inadmissible Cenvat credit on various services for construction purposes between April 2011 and October 2011. The show cause notice dated 26th May, 2014, invoked the extended period of limitation, accusing the appellant of fraudulently availing Cenvat credit. The adjudication confirmed the disallowance, along with penalties and interest. The appellant challenged the notice's validity, arguing that there was no concealment or contumacious conduct, and that proper records were maintained. The appellant contended that the extended limitation period was inapplicable, as the notice was issued more than 28 months after the inspection.

The Commissioner (Appeals) partially upheld the disallowance, allowing certain credits received before 1st April, 2011, while disallowing the remaining balance. The penalty amount was also reduced. The appellant then appealed to the Tribunal, emphasizing that the notice was time-barred and lacked allegations of concealment or improper conduct. The Revenue, however, supported the impugned order, citing the discovery of relevant facts during the inspection.

Upon review, the Tribunal found no evidence of concealment, wrong information, or contumacious conduct by the appellant. It noted that the credits were taken in continuation of previous practices, not post-amendment. Concluding that the appellant did not act with any intent to evade tax, the Tribunal held that the extended limitation period was inapplicable, rendering the show cause notice untenable. Consequently, the impugned order was set aside, and the appeal was allowed, entitling the appellant to benefits, including Cenvat credit on construction services pre-dating 1st April, 2011.