2020 (10) TMI 437 - AT - Central Excise

Extended period of limitation - it has been argued by Revenue that the extended period of limitation has been invoked as the appellant neither disclosed the facts to the department voluntarily that they were undertaking the trading activity nor they paid the amount as per the provisions of Rule 6(3) ibid - reversal of CENVAT Credit - HELD THAT - It was detected by the officers of the department on scrutiny of their records and this lead to the inference that the facts were suppressed and in the absence of detection by the officers of the department they would have gone unnoticed. So far as suppression is concerned after going through the case records I do not find any suppression on the part of the appellants. As per records audit of their records has been regularly done by the Central Excise Department during the years in question and during the course of the audit all the transactions including the transactions in question i.e. alleged trading transactions were also got regularly audited as mostly those transactions were done under the cover of proper Central Excise Invoices and it was also reflected in the books of accounts/RG-1/ER-1 returns of the appellant. As per the appellant despite disclosing everything no objection was raised by any of the Central Excise Department official who conducted the audit during all those years. It cannot be said that the transactions in question were suppressed by the appellant from the department with malafide intention to evade payment of duty or to take wrong credit. If something or anything wrong was there then it was incumbent on the Department to raise objection at the time of audit itself during all those years but the same was not done. The entire demand in the present case is barred by limitation - Appeal allowed - decided in favor of appellant.

Summary

Issues:
Extended period of limitation invocable for alleged suppression of facts leading to duty evasion.

Analysis:
The appeal was filed challenging an order passed by the Commissioner (Appeals-I), Central Tax, Pune regarding the demand of ?1,52,844/- from the Appellant for the period April 2012 to October 2015. The demand was made under Rule 14 of the Cenvat Credit Rules, 2004, read with explanation III to Rule 6(3D) and Section 73(1) of the Finance Act, 1994. The issue arose when it was discovered that the Appellant had sold certain goods purchased from the open market without subjecting them to any manufacturing process, resulting in an exempted service. The Adjudicating Authority confirmed the demand, but on appeal, the penalty was reduced to ?15,284/-.

The Appellant argued that the extended period of limitation should not apply as there was no intent to evade duty. They contended that the transactions in question were related to their manufacturing business and not trading activities. The Appellant also highlighted that the definition of 'service' under the Finance Act, 1994 excludes sale of goods transactions, making Rule 6 inapplicable. The Appellant maintained that there was no suppression of facts, as all transactions were regularly audited by the Central Excise Department without any objections being raised.

The Tribunal analyzed the issue of extended period of limitation and found that there was no suppression of facts by the Appellant. The Tribunal noted that all transactions, including the alleged trading transactions, were regularly audited and disclosed by the Appellant, without any objections being raised by the Central Excise Department officials. Therefore, the Tribunal concluded that the demand was barred by limitation and set aside the impugned order, allowing the appeal of the Appellant with consequential relief.

In conclusion, the Tribunal held that the demand against the Appellant was barred by limitation as there was no evidence of suppression of facts or intent to evade duty. The Tribunal emphasized the regular audit of transactions and the absence of objections raised by the Central Excise Department officials as crucial factors in determining the lack of suppression. Consequently, the impugned order was set aside, and the appeal of the Appellant was allowed with any consequential relief.