2019 (5) TMI 506 - AT - Central Excise

CENVAT Credit - exemption under N/N. 29/2004-CE as well as 30/2004-CE both dated 09.07.2004 availed by appellant - the department s case is that the capital goods were used exclusively for manufacture of exempted goods, therefore the credit is not admissible - Rule 6(4) of Cenvat Credit Rules, 2004 - Extended period of limitation - HELD THAT - The appellant in their ER-1 return have been clearly declaring the claim of exemption Notification No. 29/2004-CE as well as 30/2004-CE at the same time they were availing the cenvat credit on the capital goods. It is also observed in the ER-1 return that though the appellant was showing the availment of cenvat credit but were not paying excise duty for the reason that the goods were cleared under exemption notification No. 30/04-CE, therefore, relevant fact that the appellant in one hand availing the exemption notification 30/04-CE and on other hand availing the cenvat credit on capital goods were very much declared in the ER-1 return, therefore, there is no intention coming out from the ER-1 return that the appellant intend to evade any payment of duty, therefore, the entire demand raised for extended period will not sustain on the ground of limitation as the SCN for the period April 2004 to December 2004 was issued much after one year i.e. 01.01.2009. Since the demand is hit by limitation, the merits of the case not addressed - appeal allowed on the ground of limitation.

Summary

Issues:

1. Admissibility of cenvat credit on capital goods used for manufacturing exempted goods.
2. Time limitation for raising demand based on a show-cause notice issued.

Admissibility of Cenvat Credit on Capital Goods:

The case involved the appellant availing exemption under Notification No. 30/2004-CE and later under Notification No. 29/2004-CE while manufacturing grey fabrics. The department contended that as per Rule 6(4) of the Cenvat Credit Rules, 2004, no credit is allowed on capital goods used exclusively for manufacturing exempted goods. The appellant argued that the capital goods were used for both dutiable and exempted goods simultaneously, citing precedents in their favor. The appellant also highlighted that they declared the availed exemptions and cenvat credit in their monthly returns, indicating no intention to evade duty. The Tribunal found in favor of the appellant, emphasizing that the demand was time-barred as the show-cause notice was issued much after one year from the relevant period, hence setting aside the impugned order solely on the ground of limitation.

Time Limitation for Raising Demand:

The appellant contended that the demand show-cause notice issued for the period from April 2004 to December 2004 was beyond the permissible time limit. They argued that they had consistently declared the availed exemptions and cenvat credit in their monthly returns, indicating no suppression of facts. The Tribunal agreed with the appellant, stating that the demand was time-barred as the appellant's declarations in the ER-1 returns clearly showed their compliance with the exemption notifications and cenvat credit availed. As the demand was found to be hit by limitation, the Tribunal did not delve into the merits of the case, ultimately allowing the appeal on the ground of limitation.

This detailed analysis of the judgment from the Appellate Tribunal CESTAT AHMEDABAD highlights the issues regarding the admissibility of cenvat credit on capital goods and the time limitation for raising demands based on the show-cause notice issued, providing a comprehensive understanding of the legal proceedings and the final decision rendered by the Tribunal.