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2019 (7) TMI 480 - AT - Central ExciseTime LImitation - SCN - issued after 26 months after conducting of the audit - CENVAT Credit - input services - HELD THAT - The SCN was issued after 26 months after conducting of the audit - Hon ble Allahabad High court in the case of COMMISSIONER OF CENTRAL EXCISE AND SERVICE TAX VERSUS TRIVENI ENGINEERING AND INDUSTRIES LTD. 2015 (1) TMI 760 - ALLAHABAD HIGH COURT held that if a show cause notice is issued after a gap of 22 months after an audit was conducted then proviso to sub-section 1 of section 11A of Central Excise Act 1944 is not applicable unless there is a clear indication mentioned in respect of suppression or fraud etc. The ruling of Hon ble Allahabad High Court in the said case is squarely applicable in the present case where omission on the part of the appellant came to the knowledge of department on 27.02.2009 and show cause notice was not issued within normal period of limitation. Since extended period limitation is not applicable equal penalty is not imposable. Matter remanded to the original authority to decide the inadmissible Cenvat credit for the normal period of four months - appeal allowed by way of remand.
Issues: Denial of Cenvat credit, Limitation for issuance of show cause notice
Denial of Cenvat credit: The judgment revolves around the denial of Cenvat credit amounting to ?2,04,008/- availed by the appellants for the period between April 2006 to August 2010. The credit was related to Service Tax paid to movers and packers as well as on telecom services. The appellant contended that the denial was based on an audit conducted on 27.02.2009, leading to a show cause notice issued on 06.04.2011. Another notice dated 27.04.2011 was issued based on the same audit report, denying the mentioned Cenvat credit. The appellant argued against the confirmation of the demand and penalty on grounds of limitation, citing a ruling of the Hon'ble Allahabad High Court in a similar case. Limitation for issuance of show cause notice: The judgment analyzed the timeline of events, noting that the show cause notice was issued 26 months after the audit was conducted. Referring to the ruling of the Hon'ble Allahabad High Court, it was observed that if a notice is issued after a gap of 22 months post-audit without clear indications of suppression or fraud, the extended period under section 11A of the Central Excise Act, 1944, is not applicable. The Court emphasized that mere omission by the assessee without intent to evade tax cannot warrant the invocation of the extended period, especially when the evasion was detected during the audit. Consequently, for the period of four months falling within the normal limitation period, the impugned order was set aside. The matter was remanded to the original authority to decide on the inadmissible Cenvat credit for the normal period, with the observation that equal penalty was not imposable due to the inapplicability of the extended period limitation. In conclusion, the judgment primarily focused on the denial of Cenvat credit and the limitation for the issuance of the show cause notice, highlighting the significance of timelines, audit reports, and legal precedents in determining the admissibility of credit and penalties.
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