2018 (2) TMI 1555 - AT - Central Excise

CENVAT credit - SCN has been issued on the ground that the appellants have availed irregular Cenvat credit on the basis of invoices issued by the first stage dealer M/s Regal Metal and Ferro Alloys, Karampura, Delhi - Held that - the dealer supplied the different material to the Noticee on which the amount of duty had not been paid. When the duty had not been paid on the said material, the recipient of the goods i.e. Noticee was not allowed to take CENVAT Credit is respect of the goods on which no duty was paid. Thus, it is found that the Noticee had indulged in the wrong availment of CENVAT Credit with the connivance of the dealer for the different goods on which no duty was paid by the manufacturer/supplier. Extended period of limitation - Held that - the appellants had clearly suppressed the facts, which came to light only during the investigation - Once there is element of suppression, the Department is well within its powers to issue a show cause notice within 5 years of the relevant date i.e. filing of return of March, 2007 - extended period of limitation has been correctly applied. Appeal dismissed - decided against Appellant.

Summary

Issues: Irregular Cenvat credit availed by the appellant based on improper invoices from the first stage dealer; Suppression of facts leading to extended period of limitation for issuing show cause notice.

Irregular Cenvat Credit Issue:
The case involved the appellant, a manufacturer of auto parts, who purchased inputs from a first stage dealer, M/s Regal Metal & Ferro Alloys. The Revenue discovered that the dealer issued invoices for steel rods to the appellant instead of wire rods, resulting in the irregular availment of Cenvat credit by the appellant. A statement from the appellant's authorized signatory confirmed that they never received the wire rods in their factory premises. Consequently, a show cause notice was issued, and after adjudication, a demand of ?3,06,162/- was confirmed along with penalties. The investigation revealed that the dealer had purchased wire rods but invoiced them as steel rods to the appellant, leading to the irregular Cenvat credit. The adjudicating authority found that the dealer had deliberately changed the description and tariff sub-heading of the goods to facilitate the appellant's improper Cenvat credit availment. The appellant's plea of limitation based on the search and seizure dates was dismissed as suppression of facts allowed the Department to issue a show cause notice within the extended period of limitation.

Extended Period of Limitation Issue:
The appellant argued that the show cause notice issued in 2010 was beyond the permissible limitation period due to the search and seizure taking place in 2007. However, the Tribunal held that the appellant's suppression of facts during the investigation justified the Department's decision to issue the notice within five years of the relevant date. The Tribunal found no infirmity in the order of the Commissioner (Appeals) and upheld the decision, ultimately dismissing the appeal filed by the appellant. The judgment highlighted the importance of accurate documentation, proper invoicing, and adherence to Cenvat credit regulations to prevent irregularities and ensure compliance with tax laws.