2019 (6) TMI 734 - AT - Central Excise

Extended period of limitation - recovery of wrongly availed credit of duty on capital goods, inputs and input services - Classification of goods - Streptokinase - HELD THAT - The department was fully aware that the appellant was classifying the goods under 35079061. While issuing the letter dated 7.1.2010 also, the department did not doubt the classification adopted by the appellant. Only later when the appellant issued a letter dated 22.1.2010 explaining that there is no liability to pay duty on the said product, since they would be eligible for the notification benefit, as the goods are correctly classified under Chapter Heading 30049084, the demands have been made to deny the credit availed. After receiving letter dated 22.1.2010, the department has accepted the said classification of the goods under Heading 30049084 and the exemption from payment of duty. Much later, on 18.7.2012, the department has issued the present Show Cause Notice alleging that the appellant has willfully misstated the facts with intention to evade payment of duty. We do not find that the appellant has suppressed or willfully misstated any facts. The documents show that the appellants have informed all the details with regard to classification and the rate of duty adopted by them in the letters issued by them to the department - We do not find any iota of evidence to establish the ingredients under section 11AC of the Central Excise Act, 1944. The Show Cause Notice therefore is time-barred and cannot sustain. The appeal is allowed on the ground of limitation.

Summary

Issues:
1. Classification of the product "Streptokinase" under Tariff sub-headings.
2. Availment of CENVAT credit on inputs and input services for exempted goods.
3. Recovery of excise duty collected from buyers and penalties.
4. Allegations of wrongful availment of credit on capital goods, inputs, and input services.

Classification of the product "Streptokinase" under Tariff sub-headings:
The appellant initially classified the product under Tariff sub-heading 35079061 and paid duty at 4% for the period from June 2009 to December 2009. However, they later claimed full exemption under Tariff sub-heading 30049084 from April 2010 onwards. The department contended that the product should be classified under Heading 30049084, attracting a nil rate of duty. The issue revolved around the correct classification of the product for duty payment.

Availment of CENVAT credit on inputs and input services for exempted goods:
Rule 6(1) of CENVAT Credit Rules, 2004 states that no CENVAT credit can be taken on inputs or input services used in the manufacture of exempted goods. The department alleged that the appellant wrongly availed credit on inputs and input services for the exempted product "Streptokinase," leading to a demand for recovery of the wrongly availed credit.

Recovery of excise duty collected from buyers and penalties:
The department issued a Show Cause Notice proposing to recover the excise duty collected from buyers for the exempted goods "Streptokinase" along with penalties. The original authority dropped the proposal for excise duty recovery under section 11D of the Central Excise Act, 1944 but confirmed the demand for wrongly availed credit along with interest and penalties. The appellant challenged this decision before the Tribunal.

Allegations of wrongful availment of credit on capital goods, inputs, and input services:
The appellant argued that they had correctly classified the goods under Tariff sub-heading 35079061 initially and later under 30049084 for exemption. They contended that they had not suppressed any facts and had informed the department of the classification changes. The department alleged that the appellant willfully misstated the classification to avail wrong credit, which the appellant denied. The Tribunal found the Show Cause Notice time-barred and lacking evidence to establish wrongful intent, setting aside the impugned order on grounds of limitation.

This detailed analysis covers the issues of classification, CENVAT credit availment, recovery of excise duty, and allegations of wrongful credit, providing a comprehensive understanding of the legal judgment delivered by the Appellate Tribunal CESTAT CHENNAI.